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. For example, the American Electric Power Company, Inc. (NASDAQ:AEP) share price is down 11% in the last year. That's well below the market return of 31%. At least the damage isn't so bad if you look at the last three years, since the stock is down 0.9% in that time.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Unhappily, American Electric Power Company had to report a 5.6% decline in EPS over the last year. This reduction in EPS is not as bad as the 11% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
NasdaqGS:AEP Earnings Per Share Growth March 15th 2024
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on American Electric Power Company's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for American Electric Power Company the TSR over the last 1 year was -7.2%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
American Electric Power Company shareholders are down 7.2% for the year (even including dividends), but the market itself is up 31%. 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 3% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with American Electric Power Company (at least 1 which is significant) , and understanding them should be part of your investment process.
Of course American Electric Power Company 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 American exchanges.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. 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.
インデックスファンドを買うことで、投資家は平均的な市場収益を近似することができます。ただし、個々の株式を購入する場合、それより良い成績を収めることも、それより悪い成績を収めることもできます。たとえば、American Electric Power Company, Inc. (NASDAQ:AEP)の株価は、過去1年間に11%下落しており、市場収益の31%を大きく下回っています。しかし、直近の3年を見ると、株価は0.9%下落しているだけであるため、被害はそれほどひどくありません。
NasdaqGS:AEP Earnings Per Share Growth March 15th 2024
私たちは、同様に資本化された企業のほとんどのCEOよりも、CEOの報酬が控えめであることを報告することを喜んでいます。CEOの報酬に注意を払うことは常に価値がありますが、より重要な問題は企業が年々利益を成長させるかどうかです。American Electric Power Companyの収益、売上高、キャッシュフローについてのこの無料インタラクティブレポートは、株式をより詳しく調べたい場合には最適な出発点です。
配当についてはどうでしょうか?
任意の株式について、株価収益だけでなく、総株主収益を考慮することが重要です。株価収益率は株価の変化のみを反映しますが、TSRには配当の価値(再投資された場合)、割引された資本調達やスピンオフの利益が含まれます。つまり、寛大な配当を支払う企業では、TSRが株価収益率よりもはるかに高くなることがよくあります。American Electric Power CompanyのTSRは、過去1年間で-7.2%でした。これは、上記の株価収益率に比べて良い数字です。これは、配当の支払いの結果です!
別の考え方
American Electric Power Companyの株主は、株価収益を含めて、1年間で7.2%減少していますが、市場自体は31%上昇しています。ただし、最高の株式でも、12か月の期間中に時には市場を下回る場合があることを忘れないでください。明るい面では、長期的な株主は半世紀以上にわたり年間3%の利益を収めています。基礎データが長期的な持続的な成長を示し続ければ、現在の売り落としは検討する価値があるかもしれません。株価に市場環境が及ぼす影響を考慮することは十分に価値があると思いますが、それよりも重要な要因があります。例えば、投資リスクが常に存在します。私たちはAmerican Electric Power Companyで3つの警告サインを特定しました(少なくとも1つは重要です)。これらを理解することは投資プロセスの一部であるべきです。
もちろん、American Electric Power Companyが最高の株式ではないかもしれません。成長株のこの無料のコレクションをご覧になることをお勧めします。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。