Raffles Infrastructure Holdings Limited (SGX:LUY) shareholders should be happy to see the share price up 15% in the last month. But spare a thought for the long term holders, who have held the stock as it bled value over the last five years. In fact, the share price has tumbled down a mountain to land 73% lower after that period. So we don't gain too much confidence from the recent recovery. The important question is if the business itself justifies a higher share price in the long term.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During five years of share price growth, Raffles Infrastructure Holdings moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.
The revenue fall of 1.2% per year for five years is neither good nor terrible. But if the market expected durable top line growth, then that could explain the share price weakness.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Take a more thorough look at Raffles Infrastructure Holdings's financial health with this free report on its balance sheet.
A Different Perspective
Raffles Infrastructure Holdings shareholders are up 3.8% for the year. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 23% endured over half a decade. It could well be that the business is stabilizing. Before spending more time on Raffles Infrastructure Holdings it might be wise to click here to see if insiders have been buying or selling shares.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SG exchanges.
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