Investing in Plenitude Berhad (KLSE:PLENITU) a year ago would have delivered you a 86% gain

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. For example, the Plenitude Berhad (KLSE:PLENITU) share price is up 82% in the last 1 year, clearly besting the market return of around 19% (not including dividends). So that should have shareholders smiling. Looking back further, the stock price is 71% higher than it was three years ago.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for Plenitude Berhad

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Plenitude Berhad was able to grow EPS by 148% in the last twelve months. It's fair to say that the share price gain of 82% did not keep pace with the EPS growth. So it seems like the market has cooled on Plenitude Berhad, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 9.11.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Plenitude Berhad's TSR for the last 1 year was 86%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that Plenitude Berhad has rewarded shareholders with a total shareholder return of 86% in the last twelve months. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 6% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for Plenitude Berhad that you should be aware of before investing here.

We will like Plenitude Berhad better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.