While not a mind-blowing move, it is good to see that the CoreCivic, Inc. (NYSE:CXW) share price has gained 11% in the last three months. But if you look at the last five years the returns have not been good. In fact, the share price is down 38%, which falls well short of the return you could get by buying an index fund.
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 five years over which the share price declined, CoreCivic’s earnings per share (EPS) dropped by 14% each year. The share price decline of 9.0% per year isn’t as bad as the EPS decline. So investors might expect EPS to bounce back — or they may have previously foreseen the EPS decline.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Dive deeper into CoreCivic’s key metrics by checking this interactive graph of CoreCivic’s earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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, CoreCivic’s TSR for the last 5 years was -10%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It’s nice to see that CoreCivic shareholders have received a total shareholder return of 13% over the last year. That’s including the dividend. There’s no doubt those recent returns are much better than the TSR loss of 2.1% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Before spending more time on CoreCivic it might be wise to click here to see if insiders have been buying or selling shares.
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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