Apollo Commercial Real Estate Finance’s (NYSE:ARI) Stock Price Has Reduced 39% In The Past Year
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) Shareholders should be pleased that the stock is up 23% in the most recent quarter. However, this is minimal compensation for the underperformance of the stock price over the past year. In fact, the price has fallen 39% in a year and is below the returns you could get by investing in an index fund.
Check out our latest analysis for Apollo Commercial Real Estate Finance
There’s no denying that markets are efficient at times, but prices don’t always reflect underlying business performance. One way to study how market sentiment has changed over time is to examine the interaction between a company’s stock price and earnings per share (EPS).
Unfortunately, Apollo Commercial Real Estate Finance posted an 82% EPS drop last year. The 39% drop in price isn’t as bad as the drop in earnings per share. Despite the weak EPS, some investors are likely to be relieved that the situation wasn’t more difficult. In fact, with a P / E of 47.87, there is obviously real optimism that earnings will rebound.
The image below shows how EPS has been tracked over time (click the image to see more details).
NYSE: ARI earnings per share growth as of December 28, 2020
We think it’s good that insiders have bought stocks in the past twelve months. Even so, future earnings will be far more important whether current shareholders make money. Ours might be worth a look free Apollo Commercial Real Estate Finance Earnings, Revenue, and Cash Flow Report.
What about dividends?
In addition to measuring stock price return, investors should consider total shareholder return (TSR). The TSR takes into account the value of spin-offs or discounted capital increases and any dividends, based on the assumption that the dividends will be reinvested. The TSR arguably gives a more complete picture of a stock’s return. Coincidentally, Apollo Commercial Real Estate Finance’s TSR was -30% last year, which exceeds the previously mentioned share price return. The dividends paid by the company have thus increased the total return for shareholders.
Apollo Commercial Real Estate Finance shareholders are down 30% (even including dividends) over the year, but the market itself is up 23%. Note, however, that even the best stocks can sometimes underperform the market over a twelve month period. Long-term investors wouldn’t be so upset as they would have made 3% every year over five years. The recent sell-off could be an opportunity. It may therefore be worth checking the fundamentals for signs of a long-term growth trend. I find it very interesting to look at the share price as a proxy for business development over the long term. But to really gain insight, we need to consider other information as well. To do this, you should learn something about that 5 warning signs We saw Apollo Commercial Real Estate Finance (including two potentially serious ones).
There are many other companies that insiders buy stocks from. You probably do Not want to miss that free List of growing companies that insider buy.
Please note that the market returns reported in this article reflect the market-weighted average returns on stocks currently traded on US exchanges.
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