True North Commercial Real Estate Investment Trust (TSE:TNT.UN) Has Gifted Shareholders With A Fantastic 105% Total Return On Their Investment

By
Simply Wall St
Published
November 26, 2020
TSX:TNT.UN

The simplest way to invest in stocks is to buy exchange traded funds. But in our experience, buying the right stocks can give your wealth a significant boost. For example, the True North Commercial Real Estate Investment Trust (TSE:TNT.UN) share price is 29% higher than it was five years ago, which is more than the market average. In stark contrast, the stock price has actually fallen 8.0% in the last year.

Check out our latest analysis for True North Commercial Real Estate Investment Trust

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 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, True North Commercial Real Estate Investment Trust actually saw its EPS drop 11% per year.

This means it's unlikely the market is judging the company based on earnings growth. Because earnings per share don't seem to match up with the share price, we'll take a look at other metrics instead.

There's no sign of growing dividends, which might have explained the resilient share price. But it's reasonably likely that the 28% annual compound revenue growth is considered evidence that True North Commercial Real Estate Investment Trust has plenty of growth ahead of it. In that case, the company may be sacrificing current earnings per share to drive growth.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
TSX:TNT.UN Earnings and Revenue Growth November 26th 2020

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for True North Commercial Real Estate Investment Trust in this interactive graph of future profit estimates.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of True North Commercial Real Estate Investment Trust, it has a TSR of 105% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

True North Commercial Real Estate Investment Trust shareholders gained a total return of 1.4% during the year. Unfortunately this falls short of the market return. On the bright side, the longer term returns (running at about 15% a year, over half a decade) look better. 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 True North Commercial Real Estate Investment Trust better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with True North Commercial Real Estate Investment Trust (including 1 which is is potentially serious) .

True North Commercial Real Estate Investment Trust 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 CA 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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