Introducing Four Corners Property Trust (NYSE:FCPT), A Stock That Climbed 35% In The Last Three Years
Buying a low-cost index fund will get you the average market return. But in any diversified portfolio of stocks, you'll see some that fall short of the average. For example, the Four Corners Property Trust, Inc. (NYSE:FCPT) share price return of 35% over three years lags the market return in the same period. In the last year the stock price gained, albeit only 2.2%.
Check out our latest analysis for Four Corners Property Trust
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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).
During the three years of share price growth, Four Corners Property Trust actually saw its earnings per share (EPS) drop 20% per year.
Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
Interestingly, the dividend has increased over time; so that may have given the share price a boost. It could be that the company is reaching maturity and dividend investors are buying for the yield. The revenue growth of about 9.3% per year might also encourage buyers.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Four Corners Property Trust's balance sheet strength 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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Four Corners Property Trust the TSR over the last 3 years was 54%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Over the last year Four Corners Property Trust shareholders have received a TSR of 6.6%. It's always nice to make money but this return falls short of the market return which was about 25% for the year. But the (superior) three-year TSR of 15% per year is some consolation. We prefer focus on longer term returns, as they are usually a more meaningful indication of the underlying business. 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.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
