By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. Just take a look at Western Alliance Bancorporation (NYSE:WAL), which is up 64%, over three years, soundly beating the market return of 30% (not including dividends).
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
Check out our latest analysis for Western Alliance Bancorporation
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Western Alliance Bancorporation was able to grow its EPS at 26% per year over three years, sending the share price higher. This EPS growth is higher than the 18% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.49.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
NYSE:WAL Earnings Per Share Growth September 9th 2022
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on Western Alliance Bancorporation's earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Western Alliance Bancorporation, it has a TSR of 73% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
While the broader market lost about 16% in the twelve months, Western Alliance Bancorporation shareholders did even worse, losing 19% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 12%, each year, over five years. 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 Western Alliance Bancorporation better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Western Alliance Bancorporation you should know about.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
通過購買指數基金,投資者可以接近平均市場回報。但如果你選擇實力雄厚的個股,你就可以獲得優異的回報。只要看一看西部聯盟銀行(紐約證券交易所股票代碼:WAL),三年來上漲了64%,遠遠超過了30%的市場回報率(不包括股息)。
因此,讓我們來調查一下,看看該公司的長期表現是否與基礎業務的發展一致。
查看我們對西部聯盟銀行的最新分析
在他的文章中格雷厄姆和多德斯維爾的超級投資者沃倫·巴菲特描述了股價並不總是理性地反映一家企業的價值。評估圍繞一家公司的情緒變化的一個有缺陷但合理的方法是將每股收益(EPS)與股價進行比較。
西部聯盟銀行能夠在三年內以每年26%的速度增長每股收益,從而推高了股價。這一每股收益增幅高於股價年均18%的增幅。因此,市場似乎在一定程度上降低了對增長的預期。這種謹慎的情緒反映在(相當低的)市盈率8.49。
下圖描述了EPS是如何隨着時間的推移而變化的(通過單擊圖像來揭示確切的值)。
紐約證券交易所:沃爾瑪每股收益增長2022年9月9日
可能值得注意的是,我們在上個季度看到了大量的內幕收購,我們認為這是一個積極的因素。儘管如此,我們認為收益和收入增長趨勢是更重要的考慮因素。也許很值得一看我們的免費西部聯盟銀行的收益、收入和現金流報告。
那股息呢?
重要的是要考慮任何給定股票的總股東回報以及股價回報。TSR是一種回報計算,計入了現金股息的價值(假設收到的任何股息都進行了再投資),以及任何貼現融資和剝離的計算價值。因此,對於支付豐厚股息的公司來説,TSR往往比股價回報高得多。以西部聯盟銀行為例,它在過去3年的TSR為73%。這超過了我們之前提到的它的股價回報。該公司支付的股息因此提振了總計股東回報。
不同的視角
雖然大盤在過去12個月裏下跌了約16%,但西部聯盟銀行的股東表現更糟,損失了19%(甚至包括股息)。話雖如此,在下跌的市場中,一些股票不可避免地會被超賣。關鍵是要密切關注基本面的發展。較長期的投資者不會如此沮喪,因為他們在五年內每年會獲得12%的收益。最近的拋售可能是一個機會,因此可能值得查看基本面數據,以尋找長期增長趨勢的跡象。跟蹤股價的長期表現總是很有趣的。但要更好地理解西部聯盟銀行,我們需要考慮許多其他因素。例如,考慮一下風險。每家公司都有它們,我們已經發現西部聯盟銀行的2個警告信號你應該知道。
如果你喜歡和管理層一起買股票,那麼你可能會喜歡這本書免費公司名單。(提示:內部人士一直在買入這些股票)。
請注意,本文引用的市場回報反映了目前在美國交易所交易的股票的市場加權平均回報。
對這篇文章有什麼反饋嗎?擔心內容嗎? 保持聯繫直接與我們聯繫。或者,也可以給編輯組發電子郵件,地址是implywallst.com。
本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。