Reflecting on Northwest Natural Holding's (NYSE:NWN) Share Price Returns Over The Last Year
Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by Northwest Natural Holding Company (NYSE:NWN) shareholders over the last year, as the share price declined 24%. That contrasts poorly with the market return of 19%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 18% in three years. Furthermore, it's down 12% in about a quarter. That's not much fun for holders.
See our latest analysis for Northwest Natural Holding
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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, Northwest Natural Holding had to report a 2.5% decline in EPS over the last year. The share price decline of 24% is actually more than the EPS drop. So it seems the market was too confident about the business, a year ago.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
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. We note that for Northwest Natural Holding the TSR over the last year was -22%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Northwest Natural Holding shareholders are down 22% for the year (even including dividends), but the market itself is up 19%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 7.1%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. To that end, you should be aware of the 1 warning sign we've spotted with Northwest Natural Holding .
Of course Northwest Natural Holding may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. 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.
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