The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in Golden Agri-Resources Ltd (SGX:E5H) have tasted that bitter downside in the last year, as the share price dropped 11%. That contrasts poorly with the market return of 19%. However, the longer term returns haven't been so bad, with the stock down 4.1% in the last three years. In the last ninety days we've seen the share price slide 16%.

After losing 4.1% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for Golden Agri-Resources

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unfortunately Golden Agri-Resources reported an EPS drop of 57% for the last year. This fall in the EPS is significantly worse than the 11% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

SGX:E5H Earnings Per Share Growth January 15th 2025

It might be well worthwhile taking a look at our free report on Golden Agri-Resources' earnings, revenue and cash flow.

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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Golden Agri-Resources, it has a TSR of -9.3% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

Investors in Golden Agri-Resources had a tough year, with a total loss of 9.3% (including dividends), against a market gain of about 19%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for Golden Agri-Resources (1 makes us a bit uncomfortable) that you should be aware of.

Of course Golden Agri-Resources may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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