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Volatility 101: Should Yeo Hiap Seng (SGX:Y03) Shares Have Dropped 49%?

Simply Wall St
·3 mins read

Ideally, your overall portfolio should beat the market average. But every investor is virtually certain to have both over-performing and under-performing stocks. At this point some shareholders may be questioning their investment in Yeo Hiap Seng Limited (SGX:Y03), since the last five years saw the share price fall 49%.

Check out our latest analysis for Yeo Hiap Seng

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Looking back five years, both Yeo Hiap Seng's share price and EPS declined; the latter at a rate of 9.6% per year. This reduction in EPS is less than the 13% annual reduction in the share price. So it seems the market was too confident about the business, in the past.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

SGX:Y03 Past and Future Earnings May 26th 2020
SGX:Y03 Past and Future Earnings May 26th 2020

Dive deeper into Yeo Hiap Seng's key metrics by checking this interactive graph of Yeo Hiap Seng's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Yeo Hiap Seng, it has a TSR of -41% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

While it's never nice to take a loss, Yeo Hiap Seng shareholders can take comfort that , including dividends, their trailing twelve month loss of 5.8% wasn't as bad as the market loss of around 19%. What is more upsetting is the 10% per annum loss investors have suffered over the last half decade. This sort of share price action isn't particularly encouraging, but at least the losses are slowing. It's always interesting to track share price performance over the longer term. But to understand Yeo Hiap Seng better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Yeo Hiap Seng you should be aware of, and 1 of them is a bit unpleasant.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.