Singapore Technologies Engineering (SGX:S63) Shareholders See Impressive 23% Returns in the Past Year

12 Oct, 2023

Singapore Technologies Engineering (SGX:S63) Shareholders See Impressive 23% Returns in the Past Year

today's investment landscape, opting for an index fund is a straightforward approach, offering returns that closely mirror the overall market performance. However, you have the potential to enhance your returns significantly by selecting above-average stocks. A prime illustration of this is Singapore Technologies Engineering Ltd (SGX:S63), whose share price has surged by 18% in the past year, surpassing the market's marginal decline of approximately 0.6% (excluding dividends). Should the company sustain this outperformance in the long term, investors stand to benefit. Over a longer horizon, the stock's returns have been less robust, with a modest 6.6% increase compared to three years ago.

A closer examination is necessary to determine if the company's long-term performance aligns with its underlying business progress. Although some continue to espouse the efficient markets hypothesis, it's evident that markets are dynamic and over-reactive systems, and investor behavior is not always rational. An effective approach to assess how market sentiment has evolved over time is to analyze the interplay between a company's share price and its earnings per share (EPS).

Over the past twelve months, Singapore Technologies Engineering experienced a decline in its EPS by 3.4%. In some instances, companies might prioritize longer-term gains over short-term EPS, and it's possible that we can identify other positive factors at play. It's prudent to explore additional fundamental data to elucidate the reasons behind the rise in the share price.

It is essential to consider not only the share price return but also the total shareholder return (TSR) when evaluating a particular stock. TSR is a comprehensive return calculation that factors in the value of cash dividends (assuming reinvestment of any dividends received) and the assessed worth of any discounted capital raisings and spin-offs. This is particularly relevant for stocks that offer dividends. Remarkably, Singapore Technologies Engineering recorded a TSR of 23% over the last year, surpassing the previously mentioned share price return. This remarkable TSR can largely be attributed to its dividend payments.