Those who invested in Tiptree (NASDAQ:TIPT) three years ago are up 223%
It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. To wit, the Tiptree Inc. (NASDAQ:TIPT) share price has flown 206% in the last three years. How nice for those who held the stock!
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
See our latest analysis for Tiptree
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Tiptree was able to grow its EPS at 27% per year over three years, sending the share price higher. However, extraordinary items have impacted recent EPS numbers. This EPS growth is lower than the 45% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did three years ago. It is quite common to see investors become enamoured with a business, after a few years of solid progress.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on Tiptree's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Tiptree's TSR for the last 3 years was 223%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
We're pleased to report that Tiptree shareholders have received a total shareholder return of 15% over one year. That's including the dividend. Having said that, the five-year TSR of 21% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand Tiptree better, we need to consider many other factors. Take risks, for example - Tiptree has 1 warning sign we think you should be aware of.
We will like Tiptree 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 American 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.
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