Those who invested in Agree Realty (NYSE: ADC) five years ago are up 88%

When you buy and hold a stock for the long term, you absolutely want it to provide a positive return. Better yet, you would like to see the stock price rise more than the market average. Unfortunately for the shareholders, while the Real estate company agree The stock price (NYSE: ADC) has risen 55% over the past five years, less than the market performance. Zooming in, the action only rose 4.9% last year.

With that in mind, it’s worth seeing if the underlying fundamentals of the business have been driving long-term performance, or if there are any gaps.

See our latest review for Agree Realty

In his essay Graham-and-Doddsville super-investors Warren Buffett described how stock prices don’t always rationally reflect a company’s value. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).

Over the five years of share price growth, Agree Realty has seen its EPS fall by 3.2% per year.

Taking a look at these numbers, we are assuming that the decline in earnings per share is not representative of how the business has changed over the years. Since the change in EPS doesn’t seem to correlate with the change in the stock price, it’s worth taking a look at other metrics.

In contrast, revenue growth of 26% per year is probably seen as evidence of Agree Realty’s growth, a real bright spot. In this case, the company can sacrifice the current earnings per share to drive growth.

The graph below illustrates the evolution of earnings and income over time (reveal the exact values ​​by clicking on the image).

profit and revenue growth

It’s probably worth noting that we’ve seen some significant insider buying in the past quarter, which we see as positive. That said, we believe earnings and revenue growth trends are even more important factors to consider. This free report showing analyst forecasts should help you get a feel for Agree Realty

What about dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. While the share price return reflects only the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital increase or spin-off. updated. So, for companies that pay a generous dividend, the TSR is often much higher than the return on the share price. We note that for Agree Realty the TSR over the past 5 years was 88% which is better than the share price return mentioned above. This is largely the result of his dividend payments!

A different perspective

Agree Realty shareholders are up 9.3% for the year (even including dividends). But this yield is lower than the market. If we look back five years, the returns are even better, hitting 13% per year for five years. It is entirely possible that the company will continue to perform well, even if the stock price gains slow. While it is worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Concrete example: we have spotted 3 warning signs for Agree Realty you should be aware of it, and one of them doesn’t suit us very well.

There are many other companies in which insiders buy shares. You probably do not want to miss it free list of growing companies that insiders buy.

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

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.

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