For many, the main point of investing is to generate higher returns than the overall market. But every investor is virtually certain to have both over-performing and under-performing stocks. At this point some shareholders may be questioning their investment in Urban Edge Properties (NYSE:UE), since the last five years saw the share price fall 38%. We also note that the stock has performed poorly over the last year, with the share price down 26%. The falls have accelerated recently, with the share price down 20% in the last three months. But this could be related to the weak market, which is down 15% in the same period.
If the past week is anything to go by, investor sentiment for Urban Edge Properties isn’t positive, so let’s see if there’s a mismatch between fundamentals and the share price.
See our latest analysis for Urban Edge Properties
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.
During the five years over which the share price declined, Urban Edge Properties’ earnings per share (EPS) dropped by 8.6% each year. In this case, the EPS change is really very close to the share price drop of 9% a year. This implies that the market has had a fairly steady view of the stock. Rather, the share price has approximately tracked EPS growth.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
NYSE:UE Earnings Per Share Growth June 15th 2022
We know that Urban Edge Properties has improved its bottom line lately, but is it going to grow revenue? If you’re interested, you could check this free report showing consensus revenue forecasts.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Urban Edge Properties’ TSR for the last 5 years was -23%, which exceeds the share price return mentioned earlier. And there’s no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
We regret to report that Urban Edge Properties shareholders are down 23% for the year (even including dividends). Unfortunately, that’s worse than the broader market decline of 20%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It’s always interesting to track share price performance over the longer term. But to understand Urban Edge Properties better, we need to consider many other factors. Case in point: We’ve spotted 4 warning signs for Urban Edge Properties you should be aware of, and 2 of them are concerning.
But note: Urban Edge Properties may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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. 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.