This Blue-Chip Company Has Totally Outpaced The Market By Over 9X

Singapore’s Straits Times Index (SGX: ^STI) plays host to 30 of the largest companies in the Lion City. But one company has beaten the market’s returns by over four times in the last three years.

Venture Corporation  (SGX: V03) delivered a stunning 96% in total returns over the last three years. In comparison, the STI posted total returns of 10.3% for the same period. Let’s take a closer look at how the company performed during this period.

The Overachiever

Founded in 1984 as a global electronics provider, Venture Corporation now sees itself as a global provider of technology solutions, products and services. The company has a market cap of S$4.8 billion.

Between 2015 and 2017, the company saw its revenue grow from S$2.66 billion to S$4.0 billion, representing a compound annual growth rate (CAGR) of 22.6%. The strong growth in revenue trickled down to its bottom line with net profits leaping from S$154 million to S$372.8 million over the same period. With soaring profits, earnings per share (EPS) rose from S$0.56 to S$1.30.

Next, let’s look at the company’s cash-flow. The table below provides a quick summary.

Source: S&P Global Market Intelligence; All figures in S$ million except for free cash flow per share (in S$) and shares outstanding (in millions)

From the table, we can see that Venture has seen strong growth in its free cash flow (FCF) per share, which tracks the the growth in its revenue and profits. Looking at a company’s cash flow paints a more accurate picture of how the company is performing, in our view.

Free cash flow is also a source for the company’s dividends.

Show Me The Dividends

Next, we take a look at Venture’s dividend per share and payout ratio.

Source: S&P Global Market Intelligence

Venture has grown its dividend over the past three years, increasing from S$0.50 in 2015 to S$0.60 in 2017. In 2015 and 2016, Venture’s payout ratio was on the higher end of the scale. But in 2017, the payout ratio had declined to less than 40%, leaving room for dividend increases in the future.

Show Me The Money

Lastly, let’s take a look at the company’s cash position to gain a better sense of its financial resilience.

Over the past three years, Venture’s net cash position has grown strongly. In 2015, the company had a net cash position of S$334.9 million. By 2017, Venture’s net cash position had grown to an astonishing S$728.1 million.

To sum it up, Venture has been firing on all cylinders over the past three years. The company’s revenue, profits, free cash flow, dividends, and net cash positions have all grown remarkably over the period. As such, it is no surprise that the company has outperformed the index by over nine times.

The question that remains is whether Venture continue its performance from here on out.

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The Motley Fool Singapore contributor Esjay contributed to this article. Esjay does not own any of the shares mentioned. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chin Hui Leong does not own any of the shares mentioned.