Canada Markets closed
  • S&P/TSX

    20,179.81
    +187.93 (+0.94%)
     
  • S&P 500

    4,280.15
    +72.88 (+1.73%)
     
  • DOW

    33,761.05
    +424.38 (+1.27%)
     
  • CAD/USD

    0.7829
    -0.0007 (-0.0939%)
     
  • CRUDE OIL

    91.88
    -2.46 (-2.61%)
     
  • BTC-CAD

    31,293.19
    -134.95 (-0.43%)
     
  • CMC Crypto 200

    574.64
    +3.36 (+0.59%)
     
  • GOLD FUTURES

    1,799.70
    +10.00 (+0.56%)
     
  • RUSSELL 2000

    2,016.62
    +41.36 (+2.09%)
     
  • 10-Yr Bond

    2.8490
    -0.0390 (-1.35%)
     
  • NASDAQ

    13,047.19
    +267.27 (+2.09%)
     
  • VOLATILITY

    19.53
    -0.67 (-3.32%)
     
  • FTSE

    7,500.89
    +34.98 (+0.47%)
     
  • NIKKEI 225

    28,546.98
    +727.65 (+2.62%)
     
  • CAD/EUR

    0.7627
    +0.0039 (+0.51%)
     

NXP Semiconductors (NASDAQ:NXPI) sheds 3.0% this week, as yearly returns fall more in line with earnings growth

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

While NXP Semiconductors N.V. (NASDAQ:NXPI) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 19% in the last quarter. But don't let that distract from the very nice return generated over three years. In the last three years the share price is up, 55%: better than the market.

Since the long term performance has been good but there's been a recent pullback of 3.0%, let's check if the fundamentals match the share price.

Check out our latest analysis for NXP Semiconductors

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

During three years of share price growth, NXP Semiconductors achieved compound earnings per share growth of 6.6% per year. This EPS growth is lower than the 16% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did three years ago. It's not unusual to see the market 're-rate' a stock, after a few years of growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
earnings-per-share-growth

We know that NXP Semiconductors has improved its bottom line lately, but is it going to grow revenue? Check if analysts think NXP Semiconductors will grow revenue in the future.

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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for NXP Semiconductors the TSR over the last 3 years was 61%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We regret to report that NXP Semiconductors shareholders are down 24% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 19%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 8% per year over half a decade. 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. For instance, we've identified 3 warning signs for NXP Semiconductors that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting