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Did National Storage Affiliates Trust's (NYSE:NSA) Share Price Deserve to Gain 42%?

Simply Wall St

You can receive the average market return by buying a low-cost index fund. But you can make superior returns by picking better-than average stocks. For example, the National Storage Affiliates Trust (NYSE:NSA) share price is up 42% in the last three years, slightly above the market return. More recently the stock has gained 15% in a year, which isn't too bad.

View our latest analysis for National Storage Affiliates Trust

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years of share price growth, National Storage Affiliates Trust actually saw its earnings per share (EPS) drop 56% per year. So we doubt that the market is looking to EPS for its main judge of the company's value. Therefore, we think it's worth considering other metrics as well.

We note that the dividend is higher than it was preciously, so that may have assisted the share price. It could be that the company is reaching maturity and dividend investors are buying for the yield. The revenue growth of about 29% per year might also encourage buyers.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

NYSE:NSA Income Statement, April 11th 2019

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So it makes a lot of sense to check out what analysts think National Storage Affiliates Trust will earn in the future (free profit forecasts)

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, National Storage Affiliates Trust's TSR for the last 3 years was 62%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that National Storage Affiliates Trust rewarded shareholders with a total shareholder return of 20% over the last year. And yes, that does include the dividend. That gain actually surpasses the 17% TSR it generated (per year) over three years. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

National Storage Affiliates Trust is not the only stock that insiders are buying. 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.

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 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. Thank you for reading.