U.S. markets closed
  • S&P Futures

    3,759.25
    +2.50 (+0.07%)
     
  • Dow Futures

    30,011.00
    +29.00 (+0.10%)
     
  • Nasdaq Futures

    11,554.00
    +12.25 (+0.11%)
     
  • Russell 2000 Futures

    1,761.60
    +3.50 (+0.20%)
     
  • Crude Oil

    88.62
    +0.17 (+0.19%)
     
  • Gold

    1,719.30
    -1.50 (-0.09%)
     
  • Silver

    20.74
    +0.08 (+0.36%)
     
  • EUR/USD

    0.9810
    +0.0014 (+0.15%)
     
  • 10-Yr Bond

    3.8260
    +0.0670 (+1.78%)
     
  • Vix

    30.52
    +1.97 (+6.90%)
     
  • GBP/USD

    1.1185
    +0.0017 (+0.15%)
     
  • USD/JPY

    144.9470
    -0.1210 (-0.08%)
     
  • BTC-USD

    20,025.30
    -328.74 (-1.62%)
     
  • CMC Crypto 200

    455.54
    -7.59 (-1.64%)
     
  • FTSE 100

    6,997.27
    -55.35 (-0.78%)
     
  • Nikkei 225

    27,149.76
    -161.54 (-0.59%)
     

Shareholders in Global Medical REIT (NYSE:GMRE) are in the red if they invested a year ago

·4 min read

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Global Medical REIT Inc. (NYSE:GMRE) share price slid 30% over twelve months. That's well below the market decline of 17%. At least the damage isn't so bad if you look at the last three years, since the stock is down 8.1% in that time. More recently, the share price has dropped a further 12% in a month. However, we note the price may have been impacted by the broader market, which is down 9.3% in the same time period.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Global Medical REIT

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).

Global Medical REIT managed to increase earnings per share from a loss to a profit, over the last 12 months.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action. But we may find different metrics more enlightening.

We don't see any weakness in the Global Medical REIT's dividend so the steady payout can't really explain the share price drop. The revenue trend doesn't seem to explain why the share price is down. Unless, of course, the market was expecting a revenue uptick.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
earnings-and-revenue-growth

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So we recommend checking out this free report showing consensus forecasts

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 Global Medical REIT the TSR over the last 1 year was -26%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While the broader market lost about 17% in the twelve months, Global Medical REIT shareholders did even worse, losing 26% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 11%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Global Medical REIT has 2 warning signs (and 1 which is concerning) we think you should know about.

Of course Global Medical REIT may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here