Buying stocks can be a bit like gambling. There’s a chance you could lose everything. But on the flip side, a solid company can see its stock price soar. Just look at Kobay Technology Bhd. (KLSE:KOBAY). Over the last five years, its shares have jumped by 130%. Recently, the stock climbed by 3.7%.
Given this, it’s wise to dig into the company’s fundamentals to understand why it has performed well over time.
In the words of Benjamin Graham, “In the short term, the market is a voting machine, but in the long term, it’s a weighing machine.” By examining earnings per share (EPS) and stock prices over time, we can see how investors’ views on the company have changed.
Interestingly, Kobay Technology Bhd’s EPS has actually decreased by 2.2% per year, even with its impressive stock growth.
These figures suggest that the decline in EPS doesn’t fully reflect the company’s performance. Since the trend in EPS doesn’t match the rising share price, it makes sense to explore other metrics.
On a brighter note, Kobay’s revenue has been growing steadily at a rate of 15% annually for the last five years. This indicates the company may be focusing on long-term growth rather than immediate profit.
The figure below illustrates the company’s revenue and earnings over time (click for details).
It’s also helpful to consider the difference between total shareholder return (TSR) and share price return. TSR gives a fuller picture by including dividends as if they were reinvested. Kobay Technology Bhd has a TSR of 143% over five years, which is better than its share price performance.
Kobay Technology’s TSR has offered a 24% return for shareholders over the past year, which is an improvement compared to its five-year average of 19%. This uptick suggests a boost in investor confidence. Some might take this as a sign that the company is improving. But keep in mind that market conditions can influence prices, and other factors can be just as important. We’ve noticed two warning signs for Kobay Technology Bhd (one is important) that you should check out.
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earnings per share, share price, TSR
