If You Had Bought Altice USA's (NYSE:ATUS) Shares Three Years Ago You Would Be Down 23%
In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term Altice USA, Inc. (NYSE:ATUS) shareholders, since the share price is down 23% in the last three years, falling well short of the market return of around 38%. It's up 4.0% in the last seven days.
See our latest analysis for Altice USA
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.
Altice USA became profitable within the last five years. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.
Revenue is actually up 4.6% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Altice USA further; while we may be missing something on this analysis, there might also be an opportunity.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free report showing analyst forecasts should help you form a view on Altice USA
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Altice USA's total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Altice USA hasn't been paying dividends, but its TSR of -14% exceeds its share price return of -23%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.
A Different Perspective
The last twelve months weren't great for Altice USA shares, which cost holders 7.2%, while the market was up about 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 4.5% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand Altice USA better, we need to consider many other factors. Even so, be aware that Altice USA is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...
Of course Altice USA 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.
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@simplywallst.com.
