These days it’s easy to simply buy an index fund, and your returns should (roughly) match the market. But if you pick the right individual stocks, you could make more than that. For example, the First Capital Real Estate Investment Trust (TSE:FCR.UN) share price is up 37% in the last 1 year, clearly besting the market return of around 29% (not including dividends). That’s a solid performance by our standards! In contrast, the longer term returns are negative, since the share price is 9.3% lower than it was three years ago.
So let’s assess the underlying fundamentals over the last 1 year and see if they’ve moved in lock-step with shareholder returns.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
First Capital Real Estate Investment Trust was able to grow EPS by 41% in the last twelve months. We note that the earnings per share growth isn’t far from the share price growth (of 37%). So this implies that investor expectations of the company have remained pretty steady. We don’t think its coincidental that the share price is growing at a similar rate to the earnings per share.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free interactive report on First Capital Real Estate Investment Trust’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
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. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, First Capital Real Estate Investment Trust’s TSR for the last 1 year was 42%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We’re pleased to report that First Capital Real Estate Investment Trust shareholders have received a total shareholder return of 42% over one year. And that does include the dividend. There’s no doubt those recent returns are much better than the TSR loss of 0.2% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. It’s always interesting to track share price performance over the longer term. But to understand First Capital Real Estate Investment Trust better, we need to consider many other factors. Even so, be aware that First Capital Real Estate Investment Trust is showing 4 warning signs in our investment analysis , and 2 of those make us uncomfortable…
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. 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.
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