Tex Cycle Technology (M) Berhad's (KLSE:TEXCYCL) three-year earnings growth trails the solid shareholder returns

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Tex Cycle Technology (M) Berhad (KLSE:TEXCYCL) share price has soared 133% in the last three years. Most would be happy with that. Also pleasing for shareholders was the 43% gain in the last three months.

Since it's been a strong week for Tex Cycle Technology (M) Berhad shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Tex Cycle Technology (M) Berhad

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 three years of share price growth, Tex Cycle Technology (M) Berhad achieved compound earnings per share growth of 67% per year. This EPS growth is higher than the 32% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Tex Cycle Technology (M) Berhad's total shareholder return (TSR) and its 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. Dividends have been really beneficial for Tex Cycle Technology (M) Berhad shareholders, and that cash payout contributed to why its TSR of 136%, over the last 3 years, is better than the share price return.

A Different Perspective

We're pleased to report that Tex Cycle Technology (M) Berhad shareholders have received a total shareholder return of 22% over one year. That gain is better than the annual TSR over five years, which is 13%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Tex Cycle Technology (M) Berhad , and understanding them should be part of your investment process.

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 Malaysian 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.