Whereas Mid-America Apartment Communities, Inc. (NYSE:MAA) Shareholders are likely generally happy the stock hasn’t had a particularly good run recently, with the stock price dropping 10% in the last quarter. But at least the stock is up over the past five years. During this period, it has increased by 76%, which is not bad, but is below the market return of 80%.
Given that the stock has added $982 million to its market capitalization in the past week alone, let’s see if the underlying performance has generated any long-term returns.
See our latest analysis for Mid-America Apartment Communities
In his test The Graham-and-Doddsville super-investors Warren Buffett has 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).
In half a decade, Mid-America Apartment Communities has managed to increase its earnings per share by 17% per year. This EPS growth is greater than the average annual share price increase of 12%. So it seems that the market is not so enthusiastic about the title these days.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
It’s probably worth noting that the CEO is paid less than the median at companies of a similar size. It’s always worth keeping an eye on CEO compensation, but a more important question is whether the company will grow its profits over the years. It might be interesting to take a look at our free Mid-America Apartment Communities Earnings, Revenue and Cash Flow Report.
What about dividends?
It is important to consider the total shareholder return, as well as the stock price return, for a given stock. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. So for companies that pay a generous dividend, the TSR is often much higher than the stock price return. We note that for Mid-America Apartment Communities, the TSR over the past 5 years was 107%, which is better than the stock price return mentioned above. And there’s no price guessing that dividend payouts largely explain the divergence!
A different perspective
We are pleased to report that shareholders of Mid-America Apartment Communities received a total shareholder return of 17% year over year. And that includes the dividend. As the one-year TSR is better than the five-year TSR (the latter standing at 16% per year), it seems that the stock’s performance has improved lately. Given that the stock price momentum remains strong, it might be worth taking a closer look at the stock lest you miss an opportunity. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Consider the risks, for example. Every business has them, and we’ve spotted 3 Warning Signs for Central American Apartment Communities you should know.
If you like buying stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).
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.