Patterson-UTI Energy (NASDAQ:PTEN) delivers shareholders splendid 32% CAGR over 3 years, surging 18% in the last week alone
It hasn't been the best quarter for Patterson-UTI Energy, Inc. (NASDAQ:PTEN) shareholders, since the share price has fallen 14% in that time. In contrast, the return over three years has been impressive. The share price marched upwards over that time, and is now 122% higher than it was. So the recent fall in the share price should be viewed in that context. The thing to consider is whether the underlying business is doing well enough to support the current price.
Since it's been a strong week for Patterson-UTI Energy shareholders, let's have a look at trend of the longer term fundamentals.
View our latest analysis for Patterson-UTI Energy
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During three years of share price growth, Patterson-UTI Energy moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It is of course excellent to see how Patterson-UTI Energy has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Patterson-UTI Energy's financial health with this free report on its balance sheet.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. We note that for Patterson-UTI Energy the TSR over the last 3 years was 133%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
While the broader market gained around 3.9% in the last year, Patterson-UTI Energy shareholders lost 41% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Patterson-UTI Energy better, we need to consider many other factors. For instance, we've identified 1 warning sign for Patterson-UTI Energy that you should be aware of.
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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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