The 98% return delivered to Phillips Edison's (NASDAQ:PECO) shareholders actually lagged YoY earnings growth

By
Simply Wall St
Published
April 20, 2022
NasdaqGS:PECO
Source: Shutterstock

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 Phillips Edison & Company, Inc. (NASDAQ:PECO) share price is up 94% in the last 1 year, clearly besting the market return of around 0.6% (not including dividends). That's a solid performance by our standards! We'll need to follow Phillips Edison for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

Since it's been a strong week for Phillips Edison shareholders, let's have a look at trend of the longer term fundamentals.

View our latest analysis for Phillips Edison

Given that Phillips Edison only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last year Phillips Edison saw its revenue grow by 7.0%. That's not great considering the company is losing money. In keeping with the revenue growth, the share price gained 94% in that time. That's not a standout result, but it is solid - much like the level of revenue growth. It could be worth keeping an eye on this one, especially if growth accelerates.

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
NasdaqGS:PECO Earnings and Revenue Growth April 20th 2022

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on Phillips Edison

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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Phillips Edison's TSR for the last 1 year was 98%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

We're pleased to report that Phillips Edison shareholders have received a total shareholder return of 98% over one year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 6% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 4 warning signs for Phillips Edison (of which 1 can't be ignored!) you should know about.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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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