Yahoo Finance Introducing iStar (NYSE:STAR), A Stock That Climbed 18% In The Last Three Years
Low-cost index funds make it easy to achieve average market returns. But if you invest in individual stocks, some are likely to underperform. That's what has happened with the iStar Inc. (NYSE:STAR) share price. It's up 18% over three years, but that is below the market return. Zooming in, the stock is up a respectable 12% in the last year.
View our latest analysis for iStar
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...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
iStar was able to grow its EPS at 186% per year over three years, sending the share price higher. This EPS growth is higher than the 5.5% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock. We'd venture the lowish P/E ratio of 4.04 also reflects the negative sentiment around the stock.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how iStar has grown profits over the years, but the future is more important for shareholders. This free interactive report on iStar's balance sheet strength is a great place to start, if you want to investigate the stock further.
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. As it happens, iStar's TSR for the last 3 years was 23%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
It's nice to see that iStar shareholders have received a total shareholder return of 17% over the last year. Of course, that includes the dividend. That certainly beats the loss of about 2.2% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. If you would like to research iStar in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
We will like iStar better if we see some big insider buys. While we wait, check out this free list of growing companies 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 US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
