Yahoo Finance The Magellan Aerospace (TSE:MAL) Share Price Has Gained 51% And Shareholders Are Hoping For More
These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Magellan Aerospace Corporation (TSE:MAL) share price is up 51% in the last year, clearly besting the market return of around 26% (not including dividends). So that should have shareholders smiling. In contrast, the longer term returns are negative, since the share price is 36% lower than it was three years ago.
View our latest analysis for Magellan Aerospace
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over the last twelve months Magellan Aerospace went from profitable to unprofitable. While this may prove temporary, we'd consider it a negative, so we would not have expected to see the share price up. We might get a clue to explain the share price move by looking to other metrics.
Absent any improvement, we don't think a thirst for dividends is pushing up the Magellan Aerospace's share price. Revenue actually dropped 31% over last year. Usually that correlates with a lower share price, but let's face it, the gyrations of the market are sometimes only as clear as mud.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Magellan Aerospace's balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. As it happens, Magellan Aerospace's TSR for the last year was 57%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
It's good to see that Magellan Aerospace has rewarded shareholders with a total shareholder return of 57% in the last twelve months. That's including the dividend. That certainly beats the loss of about 6% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. For instance, we've identified 1 warning sign for Magellan Aerospace that you should be aware of.
Of course Magellan Aerospace may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
This article by Simply Wall St is general in nature. 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.
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