While EastGroup Properties, Inc. (NYSE:EGP) shareholders are probably generally happy, the stock hasn’t had particularly good run recently, with the share price falling 15% in the last quarter. But that scarcely detracts from the really solid long term returns generated by the company over five years. In fact, the share price is 106% higher today. Generally speaking the long term returns will give you a better idea of business quality than short periods can. Only time will tell if there is still too much optimism currently reflected in the share price.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During five years of share price growth, EastGroup Properties achieved compound earnings per share (EPS) growth of 16% per year. This EPS growth is remarkably close to the 16% average annual increase in the share price. That suggests that the market sentiment around the company hasn’t changed much over that time. In fact, the share price seems to largely reflect the EPS growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that EastGroup Properties has improved its bottom line lately, but is it going to grow revenue? Check if analysts think EastGroup Properties will grow revenue in the future.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of EastGroup Properties, it has a TSR of 142% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
EastGroup Properties shareholders gained a total return of 6.0% during the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 19% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. It’s always interesting to track share price performance over the longer term. But to understand EastGroup Properties better, we need to consider many other factors. Take risks, for example – EastGroup Properties has 4 warning signs (and 2 which shouldn’t be ignored) we think you should know about.
Of course EastGroup Properties 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 US 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. Thank you for reading.