Yahoo Finance 541% earnings growth over 1 year has not materialized into gains for Spirit Realty Capital (NYSE:SRC) shareholders over that period
It's normal to be annoyed when stock you own has a declining share price. But often it is not a reflection of the fundamental business performance. So while the Spirit Realty Capital, Inc. (NYSE:SRC) share price is down 15% in the last year, the total return to shareholders (which includes dividends) was -10%. That's better than the market which declined 10% over the last year. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 6.7% in three years. Even worse, it's down 13% in about a month, which isn't fun at all. We do note, however, that the broader market is down 13% in that period, and this may have weighed on the share price.
After losing 6.8% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
Check out our latest analysis for Spirit Realty Capital
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
The last year saw Spirit Realty Capital's EPS really take off. The rate of growth may not be sustainable, but it is still really positive. As you can imagine, the share price action therefore perturbs us. So it's worth taking a look at some other metrics.
Spirit Realty Capital's dividend seems healthy to us, so we doubt that the yield is a concern for the market. The revenue trend doesn't seem to explain why the share price is down. Unless, of course, the market was expecting a revenue uptick.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Spirit Realty Capital stock, you should check out this free report showing analyst profit forecasts.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Spirit Realty Capital the TSR over the last 1 year was -10%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
The total return of 10% received by Spirit Realty Capital shareholders over the last year isn't far from the market return of -10%. The silver lining is that longer term investors would have made a total return of 11% per year over half a decade. If the fundamental data remains strong, and the share price is simply down on sentiment, then this could be an opportunity worth investigating. 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. Even so, be aware that Spirit Realty Capital is showing 4 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
