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The AvalonBay Communities (NYSE:AVB) Share Price Is Up 34% And Shareholders Are Holding On

Simply Wall St

If you buy and hold a stock for many years, you'd hope to be making a profit. Better yet, you'd like to see the share price move up more than the market average. But AvalonBay Communities, Inc. (NYSE:AVB) has fallen short of that second goal, with a share price rise of 34% over five years, which is below the market return. Over the last twelve months the stock price has risen a very respectable 15%.

View our latest analysis for AvalonBay Communities

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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).

Over half a decade, AvalonBay Communities managed to grow its earnings per share at 9.7% a year. The EPS growth is more impressive than the yearly share price gain of 6.0% over the same period. So it seems the market isn't so enthusiastic about the stock these days.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

NYSE:AVB Past and Future Earnings, December 11th 2019

We know that AvalonBay Communities has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for AvalonBay Communities the TSR over the last 5 years was 56%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

AvalonBay Communities provided a TSR of 18% over the last twelve months. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 9.3% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. If you would like to research AvalonBay Communities in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

Of course AvalonBay Communities may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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. Thank you for reading.