While stock picking is not easy, for those who wish to persevere and learn, it is possible to buy stocks of large companies and generate wonderful returns. When an investor finds a multi-bagger (a stock that goes up over 200%), it makes a big difference to their portfolio. In the case of Dagang NeXchange Berhad (KLSE: DNEX), the stock price has risen an astounding 323% in the past year alone. But it is down 8.6% last week. However, this could be related to the overall market decline of 0.4% in one week. Equally impressive, the stock is up 85% over three years, which also pleases long-term shareholders.
Although Dagang NeXchange Berhad lost RM 216 million from its market cap this week, let’s take a look at its longer-term fundamental trends and see if they have produced any returns.
Check out our latest review for Dagang NeXchange Berhad
It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying performance of companies. An imperfect but reasonable way to gauge how sentiment is changing around a company is to compare earnings per share (EPS) with the stock price.
Over the past year, Dagang NeXchange Berhad has increased its earnings per share from loss to profit.
When a company is right on the brink of profitability, it may be helpful to consider other metrics to more accurately assess growth (and therefore understand stock price movements).
Dagang NeXchange Berhad’s revenue actually fell 20% from last year. Thus, fundamental metrics do not provide an obvious explanation for the stock price gain.
The company’s revenue and profits (over time) are shown in the image below (click to see exact numbers).
This free Dagang NeXchange Berhad’s interactive balance sheet strength report is a great place to start if you want to delve deeper into the stock market.
A different perspective
It is nice to see that Dagang NeXchange Berhad shareholders have received a total shareholder return of 323% over the past year. This gain is better than the annual TSR over five years which is 21%. Therefore, it seems that sentiment around the company has been positive lately. Someone with an optimistic outlook might view the recent improvement in TSR as indicating that the business itself is improving over time. I find it very interesting to look at the long-term share price as an indicator of company performance. But to really get an overview, we have to take other information into account as well. For example, we have identified 3 warning signs for Dagang NeXchange Berhad (2 cannot be ignored) that you should be aware of.
But beware : Dagang NeXchange Berhad may not be the best stock to buy. So take a look at this free list of interesting companies with past earnings growth (and new growth forecasts).
Please note that the market returns quoted in this article reflect the average market weighted returns of stocks currently trading on MY exchanges.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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