For many investors, the main point of stock picking is to generate higher returns than the overall market. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that’s been the case for longer term Xperi Corporation (NASDAQ:XPER) shareholders, since the share price is down 35% in the last three years, falling well short of the market return of around 44%. Shareholders have had an even rougher run lately, with the share price down 18% in the last 90 days.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
During five years of share price growth, Xperi moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. So given the share price is down it’s worth checking some other metrics too.
We note that, in three years, revenue has actually grown at a 17% annual rate, so that doesn’t seem to be a reason to sell shares. It’s probably worht worth investigating Xperi further; while we may be missing something on this analysis, there might also be an opportunity.
We know that Xperi has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Xperi stock, you should check out this free report showing analyst profit forecasts.
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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Xperi’s TSR for the last 3 years was -28%, 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 good to see that Xperi has rewarded shareholders with a total shareholder return of 33% in the last twelve months. Of course, that includes the dividend. There’s no doubt those recent returns are much better than the TSR loss of 2.4% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. Keeping this in mind, a solid next step might be to take a look at Xperi’s dividend track record. This free interactive graph is a great place to start.
But note: Xperi 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.