Low-cost index funds make it easy to achieve average market returns. But across the board there are plenty of stocks that underperform the market. That's what has happened with the Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI) share price. It's up 25% over three years, but that is below the market return. Disappointingly, the share price is down 19% in the last year.
While Fortress Transportation and Infrastructure Investors made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
Over the last three years Fortress Transportation and Infrastructure Investors has grown its revenue at 41% annually. That's well above most pre-profit companies. The stock is up 7.7% over that time - a decent but not impressive return. We would have thought the top-line growth might have impressed buyers more. It could be that the stock was previously over-priced, or its losses might worry the market. But you might want to take a closer look at this one.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
It is of course excellent to see how Fortress Transportation and Infrastructure Investors has grown profits over the years, but the future is more important for shareholders. This free interactive report on Fortress Transportation and Infrastructure Investors's balance sheet strength is a great place to start, if you want to investigate the stock further.
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 Fortress Transportation and Infrastructure Investors the TSR over the last 3 years was 60%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Fortress Transportation and Infrastructure Investors shareholders are down 12% for the year (even including dividends), but the broader market is up 7.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Fortunately the longer term story is brighter, with total returns averaging about 17% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. Before forming an opinion on Fortress Transportation and Infrastructure Investors you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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 email@example.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. Thank you for reading.