Whereas eXp World Holdings, Inc. (NASDAQ:EXPI) shareholders are likely generally happy the stock hasn’t had a particularly good run recently, with the stock price dropping 14% in the last quarter. But over five years, the returns have been remarkably high. In fact, during this period, the stock price rose 901%. Impressive! So we don’t think the recent share price decline means its story is a sad one. Only time will tell if there is still too much optimism currently reflected in the stock price. Unfortunately, not all shareholders will have held onto it for the long term, so spare a thought for those caught up in the 63% decline over the past twelve months. We love happy stories like this. The company should be really proud of this performance!
Given that the stock has added $289 million to its market capitalization in the past week alone, let’s see if the underlying performance has generated long-term returns.
Check out our latest analysis for eXp World Holdings
To quote Buffett, “Ships will circumnavigate the globe, but the Flat Earth Society will prosper. There will continue to be wide gaps between price and value in the market…’ By comparing earnings per share (EPS) and share price changes over time, we can get an idea changes in investors’ attitude towards a company over time.
In the five years of share price growth, eXp World Holdings has gone from loss to profitability. Sometimes the onset of profitability is a major inflection point that can signal rapid earnings growth to come, which in turn justifies very strong share price increases.
You can see how EPS has changed over time in the image below (click on the graph to see the exact values).
It’s probably worth noting that the CEO is paid less than the median at companies of a similar size. It’s always worth keeping an eye on CEO compensation, but a more important question is whether the company will grow its profits over the years. Dive deeper into earnings with this interactive chart of eXp World Holdings’ earnings, revenue, and cash flow.
What about dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. The TSR incorporates the value of any discounted spin-offs or capital increases, as well as any dividends, assuming the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often much higher than the stock price return. In the case of eXp World Holdings, it has a TSR of 907% for the last 5 years. This exceeds the performance of its share price that we mentioned earlier. The dividends paid by the company thus inflated the total return to shareholders.
A different perspective
We regret to report that eXp World Holdings shareholders are down 63% for the year (even including dividends). Unfortunately, this is worse than the general market decline of 16%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. On the positive side, long-term shareholders have made money, with a gain of 59% per year over half a decade. It could be that the recent selloff is an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take for example the ubiquitous specter of investment risk. We have identified 2 warning signs with eXp World Holdings, and understanding them should be part of your investment process.
If you’re like me, then you not want to miss this free list of growing companies insiders are buying.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.