MSM Malaysia Holdings Berhad (KLSE:MSM) shareholders might be concerned after seeing the share price drop 17% in the last month. But in three years the returns have been great. In three years the stock price has launched 130% higher: a great result. To some, the recent share price pullback wouldn’t be surprising after such a good run. The thing to consider is whether the underlying business is doing well enough to support the current price.

While the stock has fallen 14% this week, it’s worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

View our latest analysis for MSM Malaysia Holdings Berhad

Given that MSM Malaysia Holdings Berhad didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. When a company doesn’t make profits, we’d generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last 3 years MSM Malaysia Holdings Berhad saw its revenue shrink by 0.04% per year. So we wouldn’t have expected the share price to gain 32% per year, but it has. It’s fair to say shareholders are definitely counting on a bright future.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on MSM Malaysia Holdings Berhad’s balance sheet strength is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

Investors should note that there’s a difference between MSM Malaysia Holdings Berhad’s total shareholder return (TSR) and its share price change, which we’ve covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that MSM Malaysia Holdings Berhad’s TSR of 138% over the last 3 years is better than the share price return.

A Different Perspective

It’s good to see that MSM Malaysia Holdings Berhad has rewarded shareholders with a total shareholder return of 46% in the last twelve months. Notably the five-year annualised TSR loss of 10% 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. 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. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with MSM Malaysia Holdings Berhad (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

Of course MSM Malaysia Holdings Berhad 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 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.