SBS Transit (SGX:S61) shareholders suffered a 30% loss after investing in the stock three years ago

For many investors, the primary goal of stock picking is to generate returns that exceed those of the market as a whole. But in any portfolio, some stocks are likely to fall below this benchmark. Unfortunately, this has been the case for longer SBS Transit Ltd (SGX: S61) shareholders, as the stock price is down 35% over the past three years, well below the market decline of about 4.0%.

Now let’s look at the fundamentals of the business and see if the long-term shareholder return matches the performance of the underlying business.

Check out our latest analysis for SBS Transit

To quote Buffett, “Ships will circumnavigate the globe, but the Flat Earth Society will prosper. There will continue to be wide gaps between price and value in the market…’ An imperfect but simple way to examine how a company’s market perception has changed is to compare the evolution of earnings by action (EPS) with action price movement.

SBS Transit has seen its EPS decline at a compound rate of 18% per year, over the past three years. In comparison, the 14% annual compound decline in the share price is not as severe as the drop in EPS. This suggests that the market retains some optimism about long-term earnings stability, despite past declines in EPS.

You can see below how the EPS has evolved over time (find out the exact values ​​by clicking on the image).

earnings per share growth

It might be interesting to take a look at our free SBS Transit earnings, revenue and cash flow report.

What about dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. In the case of SBS Transit, it has a TSR of -30% over the last 3 years. This exceeds the performance of its share price that we mentioned earlier. This is largely the result of its dividend payments!

A different perspective

We regret to report that SBS Transit shareholders are down 10% for the year (even including dividends). Unfortunately, this is worse than the general market decline of 3.2%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. On the positive side, long-term shareholders have made money, with a gain of 4% per year over half a decade. It could be that the recent selloff is an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take risks, for example – SBS Transit has 3 warning signs we think you should know.

If you’re like me, then you not want to miss this free list of growing companies insiders are buying.

Please note that the market returns quoted in this article reflect the market-weighted average returns of the stocks currently trading on the SG Exchanges.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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