- Oops!Something went wrong.Please try again later.
The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on a lighter note, a good company can see its share price rise well over 100%. For example, the American Tower Corporation (REIT) (NYSE:AMT) share price has soared 142% in the last half decade. Most would be very happy with that. On top of that, the share price is up 13% in about a quarter. But this could be related to the strong market, which is up 5.6% in the last three months.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
Over half a decade, American Tower Corporation (REIT) managed to grow its earnings per share at 25% a year. The EPS growth is more impressive than the yearly share price gain of 19% over the same period. Therefore, it seems the market has become relatively pessimistic about the company. Of course, with a P/E ratio of 56.63, the market remains optimistic.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that American Tower Corporation (REIT) has improved its bottom line lately, but is it going to grow revenue? Check if analysts think American Tower Corporation (REIT) will grow revenue in the future.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for American Tower Corporation (REIT) the TSR over the last 5 years was 167%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
American Tower Corporation (REIT) shareholders gained a total return of 12% during the year. But that return falls short of the market. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 22% over five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we've spotted with American Tower Corporation (REIT) (including 1 which is concerning) .
We will like American Tower Corporation (REIT) better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.