Generally, the goal of active stock selection is to find companies that provide returns above the market average. And while aggressive stock selection involves risk (requires diversification), it can also yield excess returns. So the Singapore Exchange share price rose 30% in his five years, easily outpacing the market’s 22% decline (ignoring dividends). On the other hand, recent profits have been less impressive, with shareholder returns including dividends at just 9.5%.
It’s also worth looking at the company’s fundamentals here. That’s because it helps determine whether long-term shareholder returns are consistent with the performance of the underlying business.
Check out our latest analysis for Singapore Exchange.
In Buffett’s words, “Ships will sail around the world, but a flat-Earth society will thrive.” There will continue to be a wide discrepancy between prices and values in the marketplace. ..” 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 the five-year period of share price growth, Singapore Exchange achieved compound earnings per share (EPS) growth of 9.5% per year. This EPS growth is higher than the average annual increase in the share price of 5%. Therefore, we can conclude that the market as a whole is becoming more cautious towards stocks.
The company’s earnings per share (long-term) are depicted in the image below (click to see the exact numbers).
We know that Singapore Exchange has improved its earnings lately, but will its earnings grow? Find out if analysts think Singapore Exchange will grow its earnings in the future.
What will happen to the dividend?
It’s important to consider not only the share price return, but also the total shareholder return for a particular stock. Whereas the price/earnings ratio only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. In the case of Singapore Exchange, the TSR for the last 5 years is 54%. This exceeds the stock return mentioned earlier. Therefore, the dividend paid by the company is total Shareholder returns.
different perspective
It’s good to see that Singapore Exchange shareholders received a total shareholder return of 9.5% last year. Of course, this includes dividends. This is better than the 9% annualized return over the past five years, suggesting that the company has performed well of late. Given the share price momentum remains strong, it might be worth taking a closer look at the stock to make sure you don’t miss out. It’s always interesting to track stock performance over the long term. However, to understand Singapore Exchange better, we need to consider many other factors. For example, consider risk.Every company has them and we discovered that 1 warning sign for Singapore Exchange you should know about.
However, please note: Singapore Exchange may not be the best stock to buy.So take a look at this free A list of interesting companies that have grown their earnings in the past (and are predicted to grow in the future).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Singapore exchanges.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, 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.