Genting Malaysia Berhad (KLSE:GENM) earnings and shareholder returns have

Ideally, your overall portfolio should beat the market average. But every investor is virtually certain to have both over-performing and under-performing stocks. So we wouldn’t blame long term Genting Malaysia Berhad (KLSE:GENM) shareholders for doubting their decision to hold, with the stock down 33% over a half decade.

Although the past week has been more reassuring for shareholders, they’re still in the red over the last five years, so let’s see if the underlying business has been responsible for the decline.

See our latest analysis for Genting Malaysia Berhad

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. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

During five years of share price growth, Genting Malaysia Berhad 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 might give us a better handle on how its value is changing over time.

The most recent dividend was actually lower than it was in the past, so that may have sent the share price lower.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Genting Malaysia Berhad is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Genting Malaysia Berhad the TSR over the last 5 years was -12%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

Investors in Genting Malaysia Berhad had a tough year, with a total loss of 13% (including dividends), against a market gain of about 14%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It’s always interesting to track share price performance over…