Investors in Astro Malaysia Holdings Berhad (KLSE:ASTRO) have unfortunately lost 82% over the last three years

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3 hours ago

Every investor on earth makes bad calls sometimes. But really bad investments should be rare. So spare a thought for the long term shareholders of Astro Malaysia Holdings Berhad (KLSE:ASTRO); the share price is down a whopping 83% in the last three years. That'd be enough to cause even the strongest minds some disquiet. And over the last year the share price fell 41%, so we doubt many shareholders are delighted. The falls have accelerated recently, with the share price down 19% in the last three months. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
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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 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.
During the three years that the share price fell, Astro Malaysia Holdings Berhad's earnings per share (EPS) dropped by 33% each year. The share price decline of 45% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 6.24.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Astro Malaysia Holdings Berhad has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
A Different Perspective
We regret to report that Astro Malaysia Holdings Berhad shareholders are down 41% for the year. Unfortunately, that's worse than the broader market decline of 0.2%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 12% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Astro Malaysia Holdings Berhad better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Astro Malaysia Holdings Berhad (including 2 which are a bit concerning) .
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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