One simple way to benefit from the stock market is to buy an index fund.  But many of us dare to dream of bigger returns, and build a portfolio ourselves.  Just take a look at Singapore Airlines Limited (SGX:C6L), which is up 39%, over three years, soundly beating the market decline of 7.1% (not including dividends).   However, more recent returns haven't been as impressive as that, with the stock returning just 4.3% in the last year, including dividends.    

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.  

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance.  By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Singapore Airlines became profitable within the last three years.   So we would expect a higher share price over the period.  

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

SGX:C6L Earnings Per Share Growth June 4th 2024

It is of course excellent to see how Singapore Airlines has grown profits over the years, but the future is more important for shareholders.  This free interactive report on Singapore Airlines' balance sheet strength is a great place to start, if you want to investigate the stock further.  

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs.  Arguably, the TSR gives a more comprehensive picture of the return generated by a stock.  As it happens, Singapore Airlines' TSR for the last 3 years was 49%, which exceeds the share price return mentioned earlier.  And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Singapore Airlines shareholders are up 4.3% for the year (even including dividends).  Unfortunately this falls short of the market return.    On the bright side, that's still a gain, and it's actually better than the average return of 3% over half a decade  This suggests the company might be improving over time.        I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too.   For example, we've discovered 2 warning signs for Singapore Airlines (1 can't be ignored!) that you should be aware of before investing here.  

But note: Singapore Airlines may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Singaporean 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.