Stock Analysis

Shareholders Of Urban Logistics REIT (LON:SHED) Must Be Happy With Their 37% Return

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LSE:SHED
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One simple way to benefit from the stock market is to buy an index fund. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, Urban Logistics REIT plc (LON:SHED) shareholders have seen the share price rise 15% over three years, well in excess of the market decline (9.9%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 4.4% in the last year , including dividends .

See our latest analysis for Urban Logistics REIT

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years of share price growth, Urban Logistics REIT actually saw its earnings per share (EPS) drop 29% per year.

The strong decline in earnings per share suggests the market isn't using EPS to judge the company. So we'll need to take a look at some different metrics to try to understand why the share price remains solid.

You can only imagine how long term shareholders feel about the declining revenue trend (slipping at per year). What's clear is that historic earnings and revenue aren't matching up with the share price action, very well. So you might have to dig deeper to get a grasp of the situation

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
AIM:SHED Earnings and Revenue Growth December 16th 2020

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for Urban Logistics REIT in this interactive graph of future profit estimates.

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. In the case of Urban Logistics REIT, it has a TSR of 37% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Urban Logistics REIT rewarded shareholders with a total shareholder return of 4.4% over the last year. That includes the value of the dividend. But the three year TSR of 11% per year is even better. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Urban Logistics REIT (of which 2 are concerning!) you should know about.

Urban Logistics REIT 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 GB exchanges.

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