In order to justify the effort of selecting individual stocks, it’s worth striving to beat the returns from a market index fund. But in any portfolio, there will be mixed results between individual stocks. So we wouldn’t blame long term Alexander & Baldwin, Inc. (NYSE:ALEX) shareholders for doubting their decision to hold, with the stock down 51% over a half decade. Unfortunately the share price momentum is still quite negative, with prices down 8.6% in thirty days.
With the stock having lost 5.5% in the past week, it’s worth taking a look at business performance and seeing if there’s any red flags.
View our latest analysis for Alexander & Baldwin
There is no denying that markets are sometimes efficient, but prices do not always reflect 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).
During the five years over which the share price declined, Alexander & Baldwin’s earnings per share (EPS) dropped by 9.7% each year. This reduction in EPS is less than the 13% annual reduction in the share price. This implies that the market was previously too optimistic about the stock. Having said that, the market is still optimistic, given the P/E ratio of 53.67.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
NYSE:ALEX Earnings Per Share Growth December 3rd 2021
We know that Alexander & Baldwin has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Alexander & Baldwin’s TSR for the last 5 years was -17%, 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
It’s good to see that Alexander & Baldwin has rewarded shareholders with a total shareholder return of 44% in the last twelve months. That’s including the dividend. That certainly beats the loss of about 3% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we’ve spotted with Alexander & Baldwin (including 1 which can’t be ignored) .
But note: Alexander & Baldwin may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.