Investing in Kinergy Advancement Berhad (KLSE:KAB) five years ago would have delivered you a 630% gain

Kinergy Advancement Berhad (KLSE:KAB) shareholders might be concerned after seeing the share price drop 17% in the last quarter. But that does not change the realty that the stock's performance has been terrific, over five years. To be precise, the stock price is 616% higher than it was five years ago, a wonderful performance by any measure. So we don't think the recent decline in the share price means its story is a sad one. Only time will tell if there is still too much optimism currently reflected in the share price. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 65% decline over the last three years: that's a long time to wait for profits. Anyone who held for that rewarding ride would probably be keen to talk about it.

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

See our latest analysis for Kinergy Advancement Berhad

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Over half a decade, Kinergy Advancement Berhad managed to grow its earnings per share at 19% a year. This EPS growth is slower than the share price growth of 48% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

What About The Total Shareholder Return (TSR)?

We've already covered Kinergy Advancement Berhad's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Kinergy Advancement Berhad's TSR of 630% over the last 5 years is better than the share price return.

A Different Perspective

Kinergy Advancement Berhad provided a TSR of 9.4% over the last twelve months. But that return falls short of the market. On the bright side, the longer term returns (running at about 49% a year, over half a decade) look better. Maybe the share price is just taking a breather while the business executes on its growth strategy. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Kinergy Advancement Berhad (at least 1 which is potentially serious) , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

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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.