The past five-year earnings decline for Ladder Capital (NYSE:LADR) likely explains shareholders long-term losses
Ladder Capital Corp (NYSE:LADR) shareholders should be happy to see the share price up 14% in the last month. But that doesn't change the fact that the returns over the last five years have been less than pleasing. After all, the share price is down 33% in that time, significantly under-performing the market.
The recent uptick of 4.3% could be a positive sign of things to come, so let's take a look at historical fundamentals.
Check out our latest analysis for Ladder Capital
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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).
Looking back five years, both Ladder Capital's share price and EPS declined; the latter at a rate of 5.4% per year. This reduction in EPS is less than the 8% annual reduction in the share price. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 9.16.
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 Ladder Capital has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Ladder Capital will grow revenue in the future.
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 Ladder Capital the TSR over the last 5 years was -0.6%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Ladder Capital shareholders gained a total return of 5.7% during the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 0.1% per year, over five years. So this might be a sign the business has turned its fortunes around. 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. For example, we've discovered 3 warning signs for Ladder Capital (2 don't sit too well with us!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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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.
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