When you buy and hold a stock for the long term, you definitely want it to provide a positive return. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Physicians Realty Trust (NYSE:DOC) share price is up 22% in the last five years, that’s less than the market return. Looking at the last year alone, the stock is up 8.9%.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
During the five years of share price growth, Physicians Realty Trust moved from a loss to profitability. That’s generally thought to be a genuine positive, so we would expect to see an increasing share price. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Physicians Realty Trust share price is down 13% in the last three years. Meanwhile, EPS is up 11% per year. It would appear there’s a real mismatch between the increasing EPS and the share price, which has declined -4.6% a year for three years.
The company’s earnings per share (over time) are depicted in the image below.
We know that Physicians Realty Trust has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Physicians Realty Trust 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. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Physicians Realty Trust’s TSR for the last 5 years was 59%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
We’re pleased to report that Physicians Realty Trust shareholders have received a total shareholder return of 15% over one year. That’s including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 9.7% per year), it would seem that the stock’s performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before spending more time on Physicians Realty Trust it might be wise to click here to see if insiders have been buying or selling shares.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
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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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.