A diverse portfolio of stocks will always have winners and losers. Of course, in an ideal world, all your stocks would beat the market. VEREIT, Inc. (NYSE:VER) has done well over the last year, with the stock price up 22% beating the market return of 19% (not including dividends). Having said that, the longer term returns aren’t so impressive, with stock gaining just 12% in three years.
VEREIT wasn’t profitable in the last twelve months, it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
VEREIT actually shrunk its revenue over the last year, with a reduction of 1.2%. The stock is up 22% in that time, a fine performance given the revenue drop. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at VEREIT’s financial health with this free report on its balance sheet.
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 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, VEREIT’s TSR for the last year was 30%, 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
We’re pleased to report that VEREIT shareholders have received a total shareholder return of 30% over one year. That’s including the dividend. That gain is better than the annual TSR over five years, which is 7.1%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It’s always interesting to track share price performance over the longer term. But to understand VEREIT better, we need to consider many other factors. Case in point: We’ve spotted 1 warning sign for VEREIT you should be aware of.
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 US exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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