Atlas Arteria (ASX:ALX) Has Gifted Shareholders With A Fantastic 142% Total Return On Their Investment

When we invest, we're generally looking for stocks that outperform the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. For example, long term Atlas Arteria Limited (ASX:ALX) shareholders have enjoyed a 97% share price rise over the last half decade, well in excess of the market return of around 3.1% (not including dividends).

View our latest analysis for Atlas Arteria

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

During the last half decade, Atlas Arteria became profitable. That would generally be considered a positive, so we'd expect the share price to be up.

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. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Dive deeper into the earnings by checking this interactive graph of Atlas Arteria's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered Atlas Arteria's share price action, but we should also mention its 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. Dividends have been really beneficial for Atlas Arteria shareholders, and that cash payout contributed to why its TSR of 142%, over the last 5 years, is better than the share price return.

A Different Perspective

While the broader market lost about 8.3% in the twelve months, Atlas Arteria shareholders did even worse, losing 16%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 19%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Atlas Arteria better, we need to consider many other factors. Even so, be aware that Atlas Arteria is showing 5 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

Atlas Arteria is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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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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