Advertisement
New Zealand markets closed
  • NZX 50

    11,699.79
    -28.27 (-0.24%)
     
  • NZD/USD

    0.6136
    +0.0015 (+0.24%)
     
  • NZD/EUR

    0.5637
    +0.0008 (+0.15%)
     
  • ALL ORDS

    8,082.30
    -67.80 (-0.83%)
     
  • ASX 200

    7,814.40
    -66.90 (-0.85%)
     
  • OIL

    80.00
    +0.77 (+0.97%)
     
  • GOLD

    2,419.80
    +34.30 (+1.44%)
     
  • NASDAQ

    18,546.23
    -11.73 (-0.06%)
     
  • FTSE

    8,420.26
    -18.39 (-0.22%)
     
  • Dow Jones

    40,003.59
    +134.21 (+0.34%)
     
  • DAX

    18,704.42
    -34.39 (-0.18%)
     
  • Hang Seng

    19,553.61
    +177.08 (+0.91%)
     
  • NIKKEI 225

    38,787.38
    -132.88 (-0.34%)
     
  • NZD/JPY

    95.4860
    +0.4250 (+0.45%)
     

ONEOK's (NYSE:OKE) three-year earnings growth trails the 32% YoY shareholder returns

By buying an index fund, you can roughly match the market return with ease. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, the ONEOK, Inc. (NYSE:OKE) share price is up 90% in the last three years, clearly besting the market return of around 15% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 12% in the last year , including dividends .

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for ONEOK

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

ADVERTISEMENT

ONEOK was able to grow its EPS at 42% per year over three years, sending the share price higher. The average annual share price increase of 24% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

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

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on ONEOK's 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 return. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for ONEOK the TSR over the last 3 years was 130%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

ONEOK shareholders are up 12% for the year (even including dividends). Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it's actually better than the average return of 10% over half a decade It is possible that returns will improve along with the business fundamentals. 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 2 warning signs for ONEOK you should be aware of, and 1 of them is significant.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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