U.S. Markets closed
  • S&P 500

    3,629.63
    -5.78 (-0.16%)
     
  • Dow 30

    29,872.47
    -173.77 (-0.58%)
     
  • Nasdaq

    12,094.40
    +57.62 (+0.48%)
     
  • Russell 2000

    1,843.97
    -9.56 (-0.52%)
     
  • Crude Oil

    45.76
    +0.85 (+1.89%)
     
  • Gold

    1,805.30
    +0.70 (+0.04%)
     
  • Silver

    23.38
    +0.08 (+0.34%)
     
  • EUR/USD

    1.1925
    +0.0028 (+0.2385%)
     
  • 10-Yr Bond

    0.8780
    -0.0040 (-0.45%)
     
  • Vix

    21.19
    -0.45 (-2.08%)
     
  • GBP/USD

    1.3390
    +0.0031 (+0.2330%)
     
  • USD/JPY

    104.4200
    -0.0600 (-0.0574%)
     
  • BTC-USD

    18,867.77
    -173.06 (-0.91%)
     
  • CMC Crypto 200

    372.31
    +1.80 (+0.48%)
     
  • FTSE 100

    6,391.09
    -41.08 (-0.64%)
     
  • Nikkei 225

    26,296.86
    +131.27 (+0.50%)
     

Imagine Owning Global Net Lease (NYSE:GNL) And Wondering If The 23% Share Price Slide Is Justified

Simply Wall St

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

For many investors, the main point of stock picking is to generate higher returns than the overall market. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term Global Net Lease, Inc. (NYSE:GNL) shareholders have had that experience, with the share price dropping 23% in three years, versus a market return of about 47%. It's down 2.7% in the last seven days.

View our latest analysis for Global Net Lease

We don't think that Global Net Lease's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over three years, Global Net Lease grew revenue at 12% per year. That's a pretty good rate of top-line growth. Shareholders have endured a share price decline of 8.3% per year. This implies the market had higher expectations of Global Net Lease. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).

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

NYSE:GNL Income Statement, July 11th 2019
NYSE:GNL Income Statement, July 11th 2019

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Global Net Lease's TSR for the last 3 years was 4.5%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Global Net Lease produced a TSR of 5.2% over the last year. While you don't go broke making a profit, this return was actually lower than the average market return of about 7.0%. On the other hand, the TSR over three years was worse, at just 1.5% per year. This suggests the company's position is improving. If the business can justify the share price gain with improving fundamental data, then there could be more gains to come. 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.

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 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.