For many, the primary purpose of investing is to generate returns above those of the overall market. But in any portfolio, results will be mixed between individual stocks. At this point, some shareholders may be questioning their investment in Highwoods Properties, Inc. (NYSE:HIW), as the past five years have seen the stock price drop 18%.
Given that shareholders are down longer term, let’s take a look at the underlying fundamentals over this period and see if they have been consistent with returns.
See our latest review for Highwoods Properties
To paraphrase Benjamin Graham: in the short term, the market is a voting machine, but in the long term, it is a weighing machine. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
In the unfortunate half-decade in which the share price fell, Highwoods Properties actually saw its earnings per share (EPS) improve by 23% annually. So it doesn’t seem like EPS is a great guide to understanding how the market values the stock. Or maybe the market was previously very bullish, so the stock disappointed, despite improving EPS.
Generally speaking, we expect to see stronger share price increases on the back of continued EPS growth, but other metrics may give a clue as to why the stock price performance action is relatively modest.
We note that the dividend remained healthy, which would not really explain the decline in the share price. We don’t immediately know why the stock price is down, but further research may provide some answers.
The graph below illustrates the evolution of income and revenue over time (reveal the exact values by clicking on the image).
Balance sheet strength is critical. It might be interesting to take a look at our free report on the evolution of its financial situation over time.
What about dividends?
It is important to consider the total shareholder return, as well as the stock price return, for a given stock. While the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital raising or spin-offs. off updated. It can be said that the TSR gives a more complete picture of the return generated by a stock. It turns out that Highwoods Properties’ TSR for the last 5 years was 1.4%, which exceeds the share price return mentioned earlier. And there’s no price guessing that dividend payouts largely explain the divergence!
A different perspective
We are pleased to report that Highwoods Properties shareholders received a total shareholder return of 8.9% year over year. This includes the dividend. That’s better than the 0.3% annualized return over half a decade, implying that the company has been doing better recently. Given that the stock price momentum remains strong, it might be worth taking a closer look at the stock lest you miss an opportunity. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take risks, for example – Highwoods Properties has 3 warning signs (and 2 that make us uncomfortable) that we think you should know about.
If you’re like me, then you do not want to miss this free list of growing companies insiders are buying.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.