Optimism around Mr D.I.Y. Group (M) Berhad (KLSE:MRDIY) delivering new earnings growth may be shrinking as stock declines 4.0% this past week
Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Mr D.I.Y. Group (M) Berhad (KLSE:MRDIY) shareholders over the last year, as the share price declined 20%. That contrasts poorly with the market decline of 3.2%. We wouldn't rush to judgement on Mr D.I.Y. Group (M) Berhad because we don't have a long term history to look at.
Since Mr D.I.Y. Group (M) Berhad has shed RM754m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
View our latest analysis for Mr D.I.Y. Group (M) Berhad
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Unhappily, Mr D.I.Y. Group (M) Berhad had to report a 66% decline in EPS over the last year. The share price fall of 20% isn't as bad as the reduction in earnings per share. It may have been that the weak EPS was not as bad as some had feared.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
While Mr D.I.Y. Group (M) Berhad shareholders are down 19% for the year (even including dividends), the market itself is up 3.2%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 2.6%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Before forming an opinion on Mr D.I.Y. Group (M) Berhad you might want to consider these 3 valuation metrics.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on MY exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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