Hextar Retail Berhad (KLSE:HEXRTL) shareholders notch a 18% CAGR over 5 years, yet earnings have been shrinking

Simply Wall St · 04/14 23:02

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. Long term Hextar Retail Berhad (KLSE:HEXRTL) shareholders would be well aware of this, since the stock is up 106% in five years. And in the last week the share price has popped 12%.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

We've discovered 4 warning signs about Hextar Retail Berhad. View them for free.

We don't think that Hextar Retail Berhad's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

For the last half decade, Hextar Retail Berhad can boast revenue growth at a rate of 2.2% per year. Put simply, that growth rate fails to impress. In comparison, the share price rise of 16% per year over the last half a decade is pretty impressive. While we wouldn't be overly concerned, it might be worth checking whether you think the fundamental business gains really justify the share price action. It may be that the market is pretty optimistic about Hextar Retail Berhad.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
KLSE:HEXRTL Earnings and Revenue Growth April 14th 2025

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Hextar Retail Berhad's TSR for the last 5 years was 126%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Hextar Retail Berhad has rewarded shareholders with a total shareholder return of 2.1% in the last twelve months. And that does include the dividend. However, the TSR over five years, coming in at 18% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. It's always interesting to track share price performance over the longer term. But to understand Hextar Retail Berhad better, we need to consider many other factors. Even so, be aware that Hextar Retail Berhad is showing 4 warning signs in our investment analysis , and 2 of those are a bit concerning...

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