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A diverse portfolio of stocks will always have winners and losers. Of course, in an ideal world, all your stocks would beat the market. One such company is Altria Group, Inc. (NYSE:MO), which saw its share price increase 36% in the last year, slightly above the market return of around 31% (not including dividends). Looking back further, the stock price is 31% higher than it was three years ago.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Altria Group
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the last year Altria Group grew its earnings per share (EPS) by 20%. This EPS growth is significantly lower than the 36% increase in the share price. This indicates that the market is now more optimistic about the stock.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Altria Group has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Altria Group stock, you should check out this FREE detailed report on its balance sheet.
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 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 Altria Group the TSR over the last 1 year was 48%, 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
It's good to see that Altria Group has rewarded shareholders with a total shareholder return of 48% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 11%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Altria Group better, we need to consider many other factors. Even so, be aware that Altria Group is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...