Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. To wit, the Sachem Capital Corp. (NYSEMKT:SACH) share price is 30% higher than it was a year ago, much better than the market return of around 3.0% (not including dividends) in the same period. So that should have shareholders smiling. Sachem Capital hasn’t been listed for long, so it’s still not clear if it is a long term winner.
View our latest analysis for Sachem Capital
There is no denying that markets are sometimes efficient, but prices do not always reflect 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 last year Sachem Capital grew its earnings per share (EPS) by 38%. It’s fair to say that the share price gain of 30% did not keep pace with the EPS growth. So it seems like the market has cooled on Sachem Capital, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 8.97.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Sachem Capital’s earnings, revenue and cash flow.
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 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. As it happens, Sachem Capital’s TSR for the last year was 47%, 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
Sachem Capital shareholders should be happy with the total gain of 47% over the last twelve months, including dividends. A substantial portion of that gain has come in the last three months, with the stock up 13% in that time. This suggests the company is continuing to win over new investors. Keeping this in mind, a solid next step might be to take a look at Sachem Capital’s dividend track record. This free interactive graph is a great place to start.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.