Yahoo Finance The one-year underlying earnings growth at BlackRock (NYSE:BLK) is promising, but the shareholders are still in the red over that time
It's easy to feel disappointed if you buy a stock that goes down. But in the short term the market is a voting machine, and the share price movements may not reflect the underlying business performance. The BlackRock, Inc. (NYSE:BLK) is down 39% over a year, but the total shareholder return is -37% once you include the dividend. And that total return actually beats the market decline of 44%. The silver lining (for longer term investors) is that the stock is still 19% higher than it was three years ago. More recently, the share price has dropped a further 24% in a month. But this could be related to poor market conditions -- stocks are down 17% in the same time.
With the stock having lost 8.9% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
View our latest analysis for BlackRock
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.
Even though the BlackRock share price is down over the year, its EPS actually improved. It's quite possible that growth expectations may have been unreasonable in the past.
The divergence between the EPS and the share price is quite notable, during the year. So it's well worth checking out some other metrics, too.
BlackRock managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling BlackRock stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
While it's certainly disappointing to see that BlackRock shares lost 37% throughout the year, that wasn't as bad as the market loss of 44%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 5% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. 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 BlackRock .
BlackRock is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
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