Diversification is a key tool for dealing with stock price volatility. But if you're going to beat the market overall, you need to have individual stocks that outperform. One such company is American Campus Communities, Inc. (NYSE:ACC), which saw its share price increase 46% in the last year, slightly above the market return of around 39% (not including dividends). The longer term returns have not been as good, with the stock price only 24% higher than it was three years ago.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Over the last twelve months, American Campus Communities actually shrank its EPS by 96%.
So we don't think that investors are paying too much attention to EPS. Indeed, when EPS is declining but the share price is up, it often means the market is considering other factors.
Unfortunately American Campus Communities' fell 10% over twelve months. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).NYSE:ACC Earnings and Revenue Growth July 26th 2021
If you are thinking of buying or selling American Campus Communities stock, you should check out this FREE detailed report on its balance sheet.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. As it happens, American Campus Communities' TSR for the last year was 53%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We're pleased to report that American Campus Communities shareholders have received a total shareholder return of 53% over one year. And that does include the dividend. That's better than the annualised return of 3% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand American Campus Communities better, we need to consider many other factors. For example, we've discovered 4 warning signs for American Campus Communities (1 is concerning!) that you should be aware of before investing here.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
In This StoryACC
- NIO Inc.'s (NYSE:NIO) Shift From Loss To Profit
- New Oriental Education & Technology Group (NYSE:EDU) stock falls 12% in past week as one-year earnings and shareholder returns continue downward trend
- This Insider Has Just Sold Shares In C3.ai, Inc. (NYSE:AI)
- Alibaba (NYSE:BABA) can Easily Afford its $15.5 billion Donation to the Common Prosperity Initiative