The easiest way to invest in stocks is to buy exchange traded funds. However, in our experience, buying the right stocks can significantly increase your wealth. for example, Waste Connections Co., Ltd. (NYSE:WCN) stock is up 77% over the past five years, slightly outperforming the market return. It’s also good to see that the share price is up 16% in one year.
So let’s assess the underlying fundamentals over the past five years to see if they have kept pace with shareholder returns.
Check out our latest analysis for Waste Connect.
While there is no denying that markets are sometimes efficient, prices do not always reflect underlying company performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Over five years, Waste Connections was able to grow its earnings per share at 8.2% per year. This EPS growth rate is lower than the average annual increase in the share price of 12%. This suggests that market participants have been valuing the company highly recently. And this is not surprising given its track record of growth. This positive sentiment is reflected in the company’s (rather optimistic) P/E ratio of 54.32.
The company’s earnings per share (long-term) are depicted in the image below (click to see the exact numbers).
It’s probably worth noting that CEO salaries are lower than the median for similarly sized companies. But while CEO pay is always worth checking, the really important question is whether the company can grow its earnings going forward.It might be well worth taking a look at ours free Waste Connections earnings, revenue and cash flow report.
What will happen to the dividend?
As well as measuring share price return, investors should also consider total shareholder return (TSR). 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 increases and spin-offs. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. For Waste Connections, the TSR for the last 5 years is 84%. This exceeds the stock return mentioned earlier. Therefore, the dividend paid by the company is total Shareholder returns.
different perspective
Waste Connections offered a TSR of 17% over the last twelve months. Unfortunately, this falls short of market returns. The silver lining is that this return was actually better than the five-year average annual return of 13%. This could indicate that the company is attracting new investors as it pursues its strategy. 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.For example, consider risk – Waste Connections two warning signs I think you should know.
If you’re like me, you will. do not have I want to miss this free A list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
