There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But not every stock you buy will perform as well as the overall market. Over the last year the Cushman & Wakefield plc (NYSE:CWK) share price is up 17%, but that's less than the broader market return. The longer term returns have not been as good, with the stock price only 2.5% higher than it was three years ago.
Although Cushman & Wakefield has shed US$210m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the last year Cushman & Wakefield grew its earnings per share, moving from a loss to a profit.
When a company is just on the edge of profitability it can be well worth considering other metrics in order to more precisely gauge growth (and therefore understand share price movements).
However the year on year revenue growth of 7.3% would help. We do see some companies suppress earnings in order to accelerate revenue growth.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We know that Cushman & Wakefield has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Cushman & Wakefield's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Cushman & Wakefield produced a TSR of 17% over the last year. Unfortunately this falls short of the market return of around 21%. On the other hand, the TSR over three years was worse, at just 0.8% per year. This suggests the company's position is improving. If the share price is up as a result of improved business performance, then this kind of improvement may be sustained. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Cushman & Wakefield is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...
But note: Cushman & Wakefield 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.