By purchasing an index fund, you can easily match market returns closely. However, many of us dare to dream of big returns and build our own portfolios.Please take a look Baker Technology Co., Ltd. (SGX:BTP) is up 62% in three years, significantly outpacing the market decline of 8.9% (not including dividends).
Let's look at the underlying fundamentals over the long term and see if they are aligned with shareholder returns.
Check out our latest analysis for Baker Technology.
To paraphrase Benjamin Graham, in the short term the market is a voting machine, but in the long term it is a weighing machine. One imperfect but simple way to consider how the market perception of a company has changed is to compare the change in the earnings per share (EPS) with the share price movement.
During three years of stock price growth, Baker Technology went from a loss to a profit. This is generally considered a positive, so the stock price is expected to rise.
The company's earnings per share (long-term) are depicted in the image below (click to see the exact numbers).
We like to see that insiders have made significant purchases in the last year. Even so, future profits will be far more important than whether current shareholders make money. Before buying or selling a stock, it's always a good idea to take a closer look at past growth trends. You can get it here.
What will happen to the dividend?
When looking at return on investment, it is important to consider the following differences: Total shareholder return (TSR) and stock price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. Coincidentally, Baker Technology's TSR over the last three years was 66%, which is better than the share price return mentioned above. Therefore, the dividend paid by the company is total Shareholder returns.
different perspective
While the broader market has gained about 0.8% in the last year, Baker Technology shareholders have lost 7.8% (including dividends). Even blue-chip stocks can see their share prices drop from time to time, and we like to see improvement in a company's fundamental metrics before we get too interested. On the bright side, long-term shareholders have made money, with a return of 6% per year over 50 years. If fundamental data continues to point to long-term sustainable growth, the current selloff could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, consider risk.Every company has them and we discovered that 3 warning signs for Baker Technology you should know about.
Baker Technology isn't the only stock that insiders are buying.So take a look at this free A list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Singapore exchanges.
Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our 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 using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
