Weyerhaeuser (NYSE: WY) shareholders achieved a 13% CAGR in the past three years

Buying a low cost index fund will get you the average market return. But in any diversified portfolio of stocks, you will see some that are below average. Unfortunately for the shareholders, while the Weyerhaeuser Company (NYSE: WY) The stock price has risen 30% over the past three years, which is below market performance. On the other hand, the more recent gain of 26% over one year is certainly encouraging.

So let’s assess the underlying fundamentals over the past 3 years and see if they have moved in line with shareholder returns.

See our latest review for Weyerhaeuser

In his essay Graham-and-Doddsville super-investors Warren Buffett described how stock prices don’t always rationally reflect a company’s value. An imperfect but straightforward way to consider how a company’s market perception has changed is to compare the evolution of earnings per share (EPS) with the movement of the share price.

Weyerhaeuser was able to increase its EPS by 33% per year over three years, pushing the share price higher. This EPS growth is higher than the 9% average annual increase in the share price. Therefore, it appears that the market has moderated its growth expectations somewhat.

You can see below how the EPS has evolved over time (see the exact values ​​by clicking on the image).

NYSE: WY Growth in earnings per share October 18, 2021

We love that insiders have bought stocks in the past twelve months. Even so, future profits will be much more important to whether current shareholders make money. It might be worth taking a look at our free Weyerhaeuser earnings, revenue and cash flow report.

What about dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. TSR is a yield calculation that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of any discounted capital increase and spinoff. Arguably, the TSR gives a more complete picture of the return generated by a stock. In the case of Weyerhaeuser, he has a TSR of 46% for the past 3 years. This exceeds the return on its share price that we mentioned earlier. This is largely the result of his dividend payments!

A different perspective

Weyerhaeuser shareholders earned 31% year-over-year returns (including dividends), which is not far from the overall market return. Most would be happy with a gain, and it helps that the return for the year is actually better than the five-year average return, which was 7%. Even if the growth in the share price slows down from here, there’s a good chance this activity is worth watching in the long run. 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. Like risks, for example. Every business has them, and we’ve spotted 3 warning signs for Weyerhaeuser (1 of which should not be ignored!) that you should know.

There are many other companies that have insiders who buy stocks. 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 currently traded 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 material. Simply Wall St has no position in the mentioned stocks.

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