Did you miss the 44% gain in the share price of Ladder Capital (NYSE: LADR)?
Passive investing in index funds can generate returns that roughly match the overall market. But you can dramatically increase your returns by choosing above-average stocks. For example, the Ladder Capital Corp The stock price (NYSE: LADR) has risen 44% over the past year, clearly outperforming the market return by around 33% (excluding dividends). It’s a solid performance by our standards! In contrast, long-term returns are negative, as the stock’s price is 32% lower than it was three years ago.
Check out our latest review for Ladder Capital
Since Ladder Capital has only made minimal profits over the past twelve months, we will focus on income to assess its business development. Generally speaking, we would consider a stock like this alongside loss-making companies, just because the amount of profit is so small. In order for shareholders to have confidence that a company will increase its profits significantly, it must increase its revenues.
Ladder Capital has actually reduced its income over the past year, with a reduction of 52%. The stock is up 44% during this period, a good performance given the drop in revenues. We can correlate the rise in the stock price with the growth in income or earnings, but it seems that the market was previously expecting weaker results, and sentiment around the stock is improving.
The graph below illustrates the evolution of earnings and income over time (reveal the exact values by clicking on the image).
The strength of the balance sheet is crucial. It might be worth taking a look at our free report on changes in their financial situation over time.
What about dividends?
When considering investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. Arguably, the TSR gives a more complete picture of the return generated by a stock. We note that for Ladder Capital the TSR over the past year was 56% which is better than the share price return mentioned above. And there’s no price guessing that dividend payments are a big part of the reason for the discrepancy!
A different perspective
We are pleased to report that Ladder Capital shareholders received a total shareholder return of 56% over one year. This includes the dividend. This is better than the 5% annualized return over half a decade, which implies that the company has been doing better recently. Since the stock price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It is always interesting to follow the evolution of stock prices over the long term. But to understand Ladder Capital better, there are many other factors to consider. Take risks, for example – Ladder Capital has 5 warning signs (and 2 which don’t suit us very well) we think you should be aware of.
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.
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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 the mentioned stocks.
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