Ajinomoto (Malaysia) Berhad’s (KLSE:AJI) investors will be pleased with their respectable 43% return over the last year

These days it’s easy to simply buy an index fund, and your returns should (roughly) match the market. But if you pick the right individual stocks, you could make more than that. To wit, the Ajinomoto (Malaysia) Berhad (KLSE:AJI) share price is 42% higher than it was a year ago, much better than the market return of around 9.6% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! However, the longer term returns haven’t been so impressive, with the stock up just 3.6% in the last three years.

So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.

See our latest analysis for Ajinomoto (Malaysia) Berhad

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 the last year Ajinomoto (Malaysia) Berhad grew its earnings per share, moving from a loss to a profit.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.

We are skeptical of the suggestion that the 0.6% dividend yield would entice buyers to the stock. We think that the revenue growth of 19% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling Ajinomoto (Malaysia) Berhad stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It’s good to see that Ajinomoto (Malaysia) Berhad has rewarded shareholders with a total shareholder return of 43% in the last twelve months. That’s including the dividend. Notably the five-year annualised TSR loss of 3% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. To that end, you should be aware of the 1 warning sign we’ve spotted with Ajinomoto (Malaysia) Berhad .

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Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.