Atlantica Sustainable Infrastructure (NASDAQ: AY) Shareholders Must Be Satisfied With 167% Total Return


The main goal of investing for the long term is to make money. But more than that, you probably want to see it rise more than the market average. Unfortunately for the shareholders, while the Atlantica Sustainable Infrastructure plc (NASDAQ: AY) the stock price has risen 97% in the past five years, which is less than the market return. However, if you include dividends, the return is above the market. Some buyers are laughing, however, with a 31% increase last year.

See our latest analysis for Atlantica Sustainable Infrastructure

It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying performance of companies. An imperfect but straightforward way to consider how a company’s market perception has changed is to compare the evolution of earnings per share (EPS) with the movement of the share price.

Over the past five years, Atlantica Sustainable Infrastructure has become profitable. This would generally be viewed as positive, so we would expect the share price to rise.

You can see how EPS has changed over time in the image below (click on the graph to see the exact values).

earnings per share growth

We are happy to report that the CEO is paid more modestly than most CEOs of similar capitalization companies. It’s always worth keeping an eye on CEO compensation, but a bigger question is whether the company will increase profits over the years. Dive Deeper into Profits with this interactive graph from Atlantica Sustainable Infrastructure profit, 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. While the share price return reflects only the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital increase or spin- off updated. 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 Atlantica Sustainable Infrastructure, the TSR over the past 5 years was 167%, which is better than the share price return mentioned above. The dividends paid by the company thus boosted the total shareholder return.

A different perspective

Atlantica Sustainable Infrastructure’s TSR for the year was broadly in line with the market average at 38%. Most would be happy with a gain, and it helps that the return for the year is actually better than the five-year average return, which was 22%. Even if the growth in the share price slows down from there, there is a good chance that this activity is worth watching in the long term. I find it very interesting to look at the long-term share price as an indicator of company performance. But to really get an overview, we have to take other information into account as well. To this end, you should inquire about the 4 warning signs we identified with Atlantica Sustainable Infrastructure (including 2 which are of concern) .

For those who like to find winning investments this free list of growing companies with recent insider buys, might be just the ticket.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on the US stock exchanges.

This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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