If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. For example, the Brookfield Property REIT Inc. (NASDAQ:BPYU) share price is up 95% in the last year, clearly besting the market return of around 45% (not including dividends). That’s a solid performance by our standards! We’ll need to follow Brookfield Property REIT for a while to get a better sense of its share price trend, since it hasn’t been listed for particularly long.
Check out our latest analysis for Brookfield Property REIT
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.
During the last year Brookfield Property REIT saw its earnings per share (EPS) drop below zero. While this may prove temporary, we’d consider it a negative, so we would not have expected to see the share price up. We might get a clue to explain the share price move by looking to other metrics.
Absent any improvement, we don’t think a thirst for dividends is pushing up the Brookfield Property REIT’s share price. It saw it’s revenue decline by 20% over twelve months. It’s fair to say we’re a little surprised to see the share price up, and that makes us cautious.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
NasdaqGS:BPYU Earnings and Revenue Growth May 22nd 2021
This free interactive report on Brookfield Property REIT’s balance sheet strength 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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Brookfield Property REIT’s TSR for the last year was 114%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
Brookfield Property REIT shareholders should be happy with the total gain of 114% over the last twelve months, including dividends. We regret to report that the share price is down 0.6% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We’ve spotted 3 warning signs for Brookfield Property REIT you should be aware of, and 2 of them don’t sit too well with us.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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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