by When you buy a share, there is always a possibility that it can fall 100%. But on a lighter note, a good company can see its share price rise of more than 100%. For example the price of Antero Midstream Corporation (NYSE: AM) Stock has increased an impressive 263% in the last five years.
Let us investigate and see whether the long -term performance of the company is in accordance with the progress of the underlying company.
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In his essay The Super Investers of Graham-And-Doddsville Warren Buffett described how stock prices do not always rationally reflect the value of a company. One way to investigate how market sentiment has changed over time is by looking at the interaction between the share price of a company and the profit per share (EPS).
Antero Midstream became profitable in the last mid -decade. Sometimes the beginning of profitability is an important bending point that can indicate rapid profit growth, which in turn justifies a very strong profit of share price. Because the company was unprofitable five years ago, but not three years ago, it is worth seeing the return in the past three years. We can see that the Antero MidStream section has risen by 98% over the past three years. In the same period, EPS grew by 8.2%every year. In particular, the EPS growth has been slower than the annual share -rate profit of 25% for three years. So one can reasonably conclude that the market is more enthusiastic about the shares than three years ago.
The profit per share of the company (over time) is displayed in the image below (click to see the exact numbers).
Dive deeper into the most important statistics of Antero Midstream by checking this interactive graph of the income, income and cash flow from Antero Midstream.
If you look at investment returns, it is important to consider the difference between Total return (TSR) and stock price. The TSR is a return calculation that explains the value of cash dividends (assuming that every dividend received was re-invested) and the calculated value of any capital increases and spin-offs. So for companies that pay a generous dividend, the TSR is often much higher than the return on the share price. We note that for Antero Midstream the TSR was 481%in the last 5 years, which is better than the aforementioned share price yield. The dividends paid by the company have the total Shareholders return.
It is nice to see that Antero Midstream shareholders have received a total return of 35% of 35% in the past year. That of course includes the dividend. However, the TSR in five years, which arrives 42% per year, is even more impressive. I find it very interesting to look at the share price in the long term as a proxy for business performance. But to really gain insight, we must also consider other information. For example, we have discovered 2 warning signals for Antero Midstream What you should pay attention to before investing here.
