Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the Caleres, Inc. (NYSE:CAL) share price is 61% higher than it was a year ago, much better than the market return of around 24% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Looking back further, the stock price is 39% higher than it was three years ago.
So let’s assess the underlying fundamentals over the last 1 year and see if they’ve moved in lock-step with shareholder returns.
See our latest analysis for Caleres
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the last year, Caleres actually saw its earnings per share drop 3.2%.
Sometimes companies will sacrifice EPS in the short term for longer term gains; and in that case we may be able to find other positives. Since the change in EPS doesn’t seem to correlate with the change in share price, it’s worth taking a look at other metrics.
We are skeptical of the suggestion that the 0.8% dividend yield would entice buyers to the stock. Unfortunately Caleres’ fell 4.9% over twelve months. So the fundamental metrics don’t provide an obvious explanation for the share price gain.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We know that Caleres has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Caleres stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We’re pleased to report that Caleres shareholders have received a total shareholder return of 63% over one year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 9% per year), it would seem that the stock’s performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We’ve spotted 1 warning sign for Caleres you should be aware of.
Of course Caleres 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 American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
