Reflecting on Charter Hall Retail Real Estate Investment Trust's (ASX:CQR) Share Price Returns Over The Last Year

The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in Charter Hall Retail Real Estate Investment Trust (ASX:CQR) have tasted that bitter downside in the last year, as the share price dropped 24%. That contrasts poorly with the market return of 7.8%. However, the longer term returns haven't been so bad, with the stock down 0.8% in the last three years.

View our latest analysis for Charter Hall Retail Real Estate Investment Trust

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. 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).

Unfortunately Charter Hall Retail Real Estate Investment Trust reported an EPS drop of 24% for the last year. Remarkably, he share price decline of 24% per year is particularly close to the EPS drop. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price has approximately tracked EPS growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Charter Hall Retail Real Estate Investment Trust's TSR for the last year was -19%, 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

While the broader market gained around 7.8% in the last year, Charter Hall Retail Real Estate Investment Trust shareholders lost 19% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Charter Hall Retail Real Estate Investment Trust better, we need to consider many other factors. Even so, be aware that Charter Hall Retail Real Estate Investment Trust is showing 4 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

Of course Charter Hall Retail Real Estate Investment Trust 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 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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