It's normal to be annoyed when stock you own has a declining share price. But often it is not a reflection of the fundamental business performance. So while the Spirit MTA REIT (NYSE:SMTA) share price is down 93% in the last year, the total return to shareholders (which includes dividends) was 34%. That's better than the market which returned 18% over the last year. We wouldn't rush to judgement on Spirit MTA REIT because we don't have a long term history to look at. On top of that, the share price has dropped a further 92% in a month.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
Spirit MTA REIT isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Spirit MTA REIT's revenue didn't grow at all in the last year. In fact, it fell 1.8%. That looks pretty grim, at a glance. The market obviously agrees, since the share price tanked 93%. Holders should not lose the lesson: loss making companies should grow revenue. Of course, extreme share price falls can be an opportunity for those who are willing to really dig deeper to understand a high risk company like this.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling Spirit MTA REIT stock, you should check out this FREE detailed report on its balance sheet.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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 or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Spirit MTA REIT's TSR for the last year was 34%, 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 Spirit MTA REIT shareholders have gained 34% over the last year , including dividends . Unfortunately the share price is down 92% over the last quarter. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. Importantly, we haven't analysed Spirit MTA REIT's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.
We will like Spirit MTA REIT better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.