Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the LTC Properties, Inc. (NYSE:LTC) share price slid 32% over twelve months. That's disappointing when you consider the market returned 21%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 25% in three years. The good news is that the stock is up 2.2% in the last week.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unfortunately LTC Properties reported an EPS drop of 0.9% for the last year. This reduction in EPS is not as bad as the 32% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
This free interactive report on LTC Properties' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, LTC Properties' TSR for the last year was -28%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
LTC Properties shareholders are down 28% for the year (even including dividends), but the market itself is up 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 0.8% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand LTC Properties better, we need to consider many other factors. Take risks, for example - LTC Properties has 3 warning signs (and 2 which are a bit concerning) we think you should know about.
Of course LTC Properties may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. 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.
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