Reflecting on Preferred Apartment Communities' (NYSE:APTS) Share Price Returns Over The Last Three Years

Preferred Apartment Communities, Inc. (NYSE:APTS) shareholders should be happy to see the share price up 22% in the last quarter. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 41% in the last three years, falling well short of the market return.

View our latest analysis for Preferred Apartment Communities

Preferred Apartment Communities wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, Preferred Apartment Communities saw its revenue grow by 20% per year, compound. That's a fairly respectable growth rate. Shareholders have endured a share price decline of 12% per year. This implies the market had higher expectations of Preferred Apartment Communities. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Preferred Apartment Communities in this interactive graph of future profit estimates.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Preferred Apartment Communities the TSR over the last 3 years was -25%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Investors in Preferred Apartment Communities had a tough year, with a total loss of 19% (including dividends), against a market gain of about 27%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 0.5% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Preferred Apartment Communities better, we need to consider many other factors. Even so, be aware that Preferred Apartment Communities is showing 4 warning signs in our investment analysis , you should know about...

Preferred Apartment Communities is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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