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For many, the main point of investing is to generate higher returns than the overall market. But the main game is to find enough winners to more than offset the losers So we wouldn't blame long term Schroder Real Estate Investment Trust Limited (LON:SREI) shareholders for doubting their decision to hold, with the stock down 23% over a half decade.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
View our latest analysis for Schroder Real Estate Investment Trust
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 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.
Schroder Real Estate Investment Trust became profitable within the last five years. However, it made a loss in the last twelve months, suggesting profit may be an unreliable metric at this stage. Other metrics may better explain the share price move.
We note that the dividend has remained healthy, so that wouldn't really explain the share price drop. While it's not completely obvious why the share price is down, a closer look at the company's history might help explain it.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on Schroder Real Estate Investment Trust'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. We note that for Schroder Real Estate Investment Trust the TSR over the last 5 years was 2.1%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Schroder Real Estate Investment Trust provided a TSR of 3.3% over the last twelve months. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 0.4% per year over five year. It is possible that returns will improve along with the business fundamentals. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Schroder Real Estate Investment Trust (of which 2 are a bit concerning!) you should know about.