These days it’s easy to simply buy an index fund, and your returns should (roughly) match the market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the STORE Capital Corporation (NYSE:STOR) share price is 33% higher than it was a year ago, much better than the market return of around 1.0% (not including dividends) in the same period. So that should have shareholders smiling. Having said that, the longer term returns aren’t so impressive, with stock gaining just 26% in three years.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
STORE Capital was able to grow EPS by 17% in the last twelve months. This EPS growth is significantly lower than the 33% increase in the share price. So it’s fair to assume the market has a higher opinion of the business than it a year ago.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that STORE Capital has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for STORE Capital the TSR over the last year was 39%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Pleasingly, STORE Capital’s total shareholder return last year was 39%. That’s including the dividend. That gain actually surpasses the 13% TSR it generated (per year) over three years. Given the track record of solid returns over varying time frames, it might be worth putting STORE Capital on your watchlist. If you would like to research STORE Capital in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
If you are like me, then you will 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 US exchanges.
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If you spot an error that warrants correction, please contact the editor at email@example.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.