The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in New York Mortgage Trust, Inc. (NASDAQ:NYMT), since the last five years saw the share price fall 18%.
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 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).
Looking back five years, both New York Mortgage Trust’s share price and EPS declined; the latter at a rate of 19% per year. This fall in the EPS is worse than the 3.9% compound annual share price fall. So investors might expect EPS to bounce back — or they may have previously foreseen the EPS decline.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into New York Mortgage Trust’s key metrics by checking this interactive graph of New York Mortgage Trust’s earnings, revenue and cash flow.
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 New York Mortgage Trust, it has a TSR of 65% for the last 5 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
New York Mortgage Trust shareholders are up 14% for the year (even including dividends) . But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 11% per year over five year. It is possible that returns will improve along with the business fundamentals. It’s always interesting to track share price performance over the longer term. But to understand New York Mortgage Trust better, we need to consider many other factors. Take risks, for example – New York Mortgage Trust has 2 warning signs we think you should be aware of.
But note: New York Mortgage Trust 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 US exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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