Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. For example, the BrightSphere Investment Group Inc. (NYSE:BSIG) share price is up 89% in the last year, clearly besting the market return of around 37% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Looking back further, the stock price is 68% higher than it was three years ago.
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 the last year BrightSphere Investment Group grew its earnings per share (EPS) by 63%. The share price gain of 89% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.
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 BrightSphere Investment Group's earnings, revenue and cash flow.
A Different Perspective
It's nice to see that BrightSphere Investment Group shareholders have received a total shareholder return of 89% over the last year. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 14% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand BrightSphere Investment Group better, we need to consider many other factors. For instance, we've identified 2 warning signs for BrightSphere Investment Group (1 doesn't sit too well with us) that you should be aware of.
Of course BrightSphere Investment Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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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