The total return for Grupo Aeroportuario del Centro Norte. de (BMV:OMAB) investors has risen faster than earnings growth over the last five years
Grupo Aeroportuario del Centro Norte (BMV:OMAB) shareholders have seen an 89% share price rise over the last five years, outperforming the market's 40% return. The company's earnings per share grew at 27% annually, higher than the 14% annual share price increase. Total shareholder return (TSR) for the last five years was 155%, boosted by dividends. Recent one-year TSR is 42%, indicating positive sentiment. However, the company lost Mex$3.9b in market cap this week.
Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, long term Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (BMV:OMAB) shareholders have enjoyed a 89% share price rise over the last half decade, well in excess of the market return of around 40% (not including dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 42%, including dividends.
Although Grupo Aeroportuario del Centro Norte. de has shed Mex$3.9b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 half a decade, Grupo Aeroportuario del Centro Norte. de managed to grow its earnings per share at 27% a year. This EPS growth is higher than the 14% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Grupo Aeroportuario del Centro Norte. de's key metrics by checking this interactive graph of Grupo Aeroportuario del Centro Norte. de'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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Grupo Aeroportuario del Centro Norte. de's TSR for the last 5 years was 155%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
We're pleased to report that Grupo Aeroportuario del Centro Norte. de shareholders have received a total shareholder return of 42% over one year. That's including the dividend. That gain is better than the annual TSR over five years, which is 21%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. To that end, you should be aware of the 2 warning signs we've spotted with Grupo Aeroportuario del Centro Norte. de .
We will like Grupo Aeroportuario del Centro Norte. de better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Mexican exchanges.
