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Should Innovative Industrial Properties (NYSE:IIPR) Be Disappointed With Their 79% Profit?

Simply Wall St

The last three months have been tough on Innovative Industrial Properties, Inc. (NYSE:IIPR) shareholders, who have seen the share price decline a rather worrying 32%. While that might be a setback, it doesn't negate the nice returns received over the last twelve months. To wit, it had solidly beat the market, up 79%.

See our latest analysis for Innovative Industrial Properties

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Innovative Industrial Properties was able to grow EPS by 135% in the last twelve months. This EPS growth is significantly higher than the 79% increase in the share price. So it seems like the market has cooled on Innovative Industrial Properties, despite the growth. Interesting. Of course, with a P/E ratio of 64.10, the market remains optimistic.

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

NYSE:IIPR Past and Future Earnings, October 23rd 2019

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. Dive deeper into the earnings by checking this interactive graph of Innovative Industrial Properties's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Innovative Industrial Properties, it has a TSR of 83% for the last year. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that Innovative Industrial Properties shareholders have gained 83% over the last year , including dividends . We regret to report that the share price is down 32% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

But note: Innovative Industrial Properties may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.