Yahoo Finance Investors who have held Dominion Energy (NYSE:D) over the last year have watched its earnings decline along with their investment
It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Dominion Energy, Inc. (NYSE:D) share price is down 35% in the last year. That contrasts poorly with the market decline of 12%. At least the damage isn't so bad if you look at the last three years, since the stock is down 22% in that time. But it's up 6.4% in the last week.
While the stock has risen 6.4% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.
See our latest analysis for Dominion Energy
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.
Unhappily, Dominion Energy had to report a 66% decline in EPS over the last year. This fall in the EPS is significantly worse than the 35% the share price fall. It may have been that the weak EPS was not as bad as some had feared. With a P/E ratio of 52.04, it's fair to say the market sees an EPS rebound on the cards.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Dominion Energy's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Dominion Energy's TSR for the last 1 year was -32%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
While the broader market lost about 12% in the twelve months, Dominion Energy shareholders did even worse, losing 32% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 0.3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Dominion Energy has 5 warning signs (and 2 which shouldn't be ignored) we think you should know about.
We will like Dominion Energy 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 American exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
