U.S. Markets closed
  • S&P 500

    4,538.42
    -38.68 (-0.85%)
     
  • Dow 30

    34,580.08
    -59.71 (-0.17%)
     
  • Nasdaq

    15,085.47
    -295.85 (-1.92%)
     
  • Russell 2000

    2,146.59
    -59.74 (-2.71%)
     
  • Crude Oil

    66.12
    -0.38 (-0.57%)
     
  • Gold

    1,784.10
    +21.40 (+1.21%)
     
  • Silver

    22.52
    +0.21 (+0.94%)
     
  • EUR/USD

    1.1315
    +0.0009 (+0.0792%)
     
  • 10-Yr Bond

    1.3430
    -0.1050 (-7.25%)
     
  • Vix

    32.15
    +4.20 (+15.03%)
     
  • GBP/USD

    1.3242
    -0.0060 (-0.4542%)
     
  • USD/JPY

    112.7380
    -0.4710 (-0.4160%)
     
  • BTC-USD

    53,428.88
    -3,593.37 (-6.30%)
     
  • CMC Crypto 200

    1,356.08
    -85.68 (-5.94%)
     
  • FTSE 100

    7,122.32
    -6.89 (-0.10%)
     
  • Nikkei 225

    28,029.57
    +276.20 (+1.00%)
     

Magnolia Oil & Gas' (NYSE:MGY) investors will be pleased with their massive 306% return over the last year

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

While stock picking isn't easy, for those willing to persist and learn, it is possible to buy shares in great companies, and generate wonderful returns. When you buy and hold the right company, the returns can make a huge difference to both you and your family. For example, Magnolia Oil & Gas Corporation (NYSE:MGY) has generated a beautiful 304% return in just a single year. Also pleasing for shareholders was the 55% gain in the last three months. And shareholders have also done well over the long term, with an increase of 45% in the last three years.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

View our latest analysis for Magnolia Oil & Gas

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

Magnolia Oil & Gas went from making a loss to reporting a profit, in the last year.

The result looks like a strong improvement to us, so we're not surprised the market likes the growth. Generally speaking the profitability inflection point is a great time to research a company closely, lest you miss an opportunity to profit.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Magnolia Oil & Gas' TSR for the last 1 year was 306%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It's nice to see that Magnolia Oil & Gas shareholders have gained 306% (in total) over the last year. That's including the dividend. So this year's TSR was actually better than the three-year TSR (annualized) of 13%. Given the track record of solid returns over varying time frames, it might be worth putting Magnolia Oil & Gas on your watchlist. It's always interesting to track share price performance over the longer term. But to understand Magnolia Oil & Gas better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Magnolia Oil & Gas you should be aware of, and 1 of them is a bit concerning.

Magnolia Oil & Gas is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.