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Can You Imagine How RioCan Real Estate Investment Trust's (TSE:REI.UN) Shareholders Feel About The 10% Share Price Increase?

Simply Wall St

The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. To wit, the RioCan Real Estate Investment Trust (TSE:REI.UN) share price is 10% higher than it was a year ago, much better than the market return of around 5.8% (not including dividends) in the same period. That's a solid performance by our standards! The longer term returns have not been as good, with the stock price only 2.9% higher than it was three years ago.

View our latest analysis for RioCan Real Estate Investment Trust

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During the last year RioCan Real Estate Investment Trust grew its earnings per share (EPS) by 38%. This EPS growth is significantly higher than the 10% increase in the share price. Therefore, it seems the market isn't as excited about RioCan Real Estate Investment Trust as it was before. This could be an opportunity. The caution is also evident in the lowish P/E ratio of 10.91.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

TSX:REI.UN Past and Future Earnings, February 17th 2020

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on RioCan Real Estate Investment Trust's earnings, revenue and cash flow 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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, RioCan Real Estate Investment Trust's TSR for the last year was 16%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that RioCan Real Estate Investment Trust has rewarded shareholders with a total shareholder return of 16% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 4.4%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with RioCan Real Estate Investment Trust , and understanding them should be part of your investment process.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

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.

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. Thank you for reading.