FIBRA Macquarie México (BMV:FIBRAMQ12) Has Compensated Shareholders With A Respectable 60% Return On Their Investment

One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, the FIBRA Macquarie México (BMV:FIBRAMQ12) share price is up 28% in the last three years, clearly besting the market decline of around 8.0% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 4.6% in the last year , including dividends .

View our latest analysis for FIBRA Macquarie México

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 three years of share price growth, FIBRA Macquarie México actually saw its earnings per share (EPS) drop 2.6% per year.

Given the share price resilience, we don't think the (declining) EPS numbers are a good measure of how the business is moving forward, right now. Therefore, it makes sense to look into other metrics.

We note that the dividend is higher than it was preciously, so that may have assisted the share price. Sometimes yield-chasing investors will flock to a company if they think the dividend can grow over time. On top of that, revenue grew at a rate of 5.5% per year, and it's likely investors interpret that as pointing to a brighter future.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We know that FIBRA Macquarie México has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for FIBRA Macquarie México 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of FIBRA Macquarie México, it has a TSR of 60% for the last 3 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

It's good to see that FIBRA Macquarie México has rewarded shareholders with a total shareholder return of 4.6% in the last twelve months. That's including the dividend. However, that falls short of the 11% TSR per annum it has made for shareholders, each year, over five years. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with FIBRA Macquarie México (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.

But note: FIBRA Macquarie México may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on MX 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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