Marcus & Millichap (NYSE:MMI) jumps 4.0% this week, though earnings growth is still tracking behind five-year shareholder returns

By
Simply Wall St
Published
February 19, 2022
NYSE:MMI
Source: Shutterstock

The simplest way to invest in stocks is to buy exchange traded funds. But you can do a lot better than that by buying good quality businesses for attractive prices. For example, the Marcus & Millichap, Inc. (NYSE:MMI) share price is up 80% in the last five years, slightly above the market return. It's fair to say the stock has continued its long term trend in the last year, over which it has risen 23%.

The past week has proven to be lucrative for Marcus & Millichap investors, so let's see if fundamentals drove the company's five-year performance.

View our latest analysis for Marcus & Millichap

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 five years of share price growth, Marcus & Millichap achieved compound earnings per share (EPS) growth of 8.6% per year. This EPS growth is lower than the 12% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
NYSE:MMI Earnings Per Share Growth February 19th 2022

We know that Marcus & Millichap has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Marcus & Millichap will grow revenue in the future.

A Different Perspective

We're pleased to report that Marcus & Millichap shareholders have received a total shareholder return of 23% over one year. That gain is better than the annual TSR over five years, which is 12%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. If you would like to research Marcus & Millichap in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

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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