Killam Apartment Real Estate Investment Trust (TSX:KMP-UN) has been on investors’ radars for quite some time now, with a 54% increase in shareholder return over the past five years, despite lower earnings compared to five years ago. While the share price is up 27% in the last five years, it is down by 19% in the last year. In this article, we will take a closer look at Killam Apartment REIT’s performance, analyzing factors such as its earnings per share (EPS), dividend payments, and long-term growth trend.
Assessing the Company’s Fundamentals
It’s essential to focus on the longer term and evaluate if underlying fundamentals drove the stock’s historical returns, despite a 3.5% fall this week. Markets are dynamic, and investors aren’t always rational, disproving the efficient markets hypothesis. One way to assess how sentiment around a company has changed is to compare the EPS with the share price.
Over the last five years, Killam Apartment REIT’s EPS has declined by 5% per year, despite strong share price performance. This decline suggests that investors may have had some concerns about the company, but the reality has been better than anticipated. However, if the EPS falls continue, it is unlikely that there will be a sustained increase in the share price.
Dividend Payments and Total Shareholder Return
It is essential to consider both the share price return and the total shareholder return (TSR) for any given stock. The TSR includes the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Therefore, for companies that pay a generous dividend, the TSR is often significantly higher than the share price return.
In the case of Killam Apartment REIT, it has a TSR of 54% for the last five years, exceeding its share price return that we previously mentioned. This is largely due to its dividend payments, making it an attractive option for investors looking for steady income.
A Different Perspective
Unfortunately, Killam Apartment REIT shareholders are down 16% for the year, even including dividends. This is worse than the broader market decline of 5.4%. However, it’s important to remember that some stocks will be oversold in a falling market. The key is to keep an eye on the fundamental developments. Over the past five years, longer-term investors would have made a 9% return each year, so they wouldn’t be so upset.
It’s also worth noting that Killam Apartment REIT has some warning signs, with three concerning factors that investors should be aware of. Therefore, before buying or selling any stock, we always recommend a thorough examination of the company’s historic growth trends.
Killam Apartment Stock Analysis and Price Target
Killam Apartment Real Estate Investment Trust’s stock price is expected to reach CAD 21.05 in the next 12 months, according to the average analyst target price from 13 analysts. This indicates a Strong Buy rating from the average analyst. However, Stock Target Advisor’s analysis of the stock is Neutral, based on 7 positive signals and 6 negative signals. The current stock price for Killam Apartment Real Estate Investment Trust is CAD 17.41, which represents a decline of 3.55% over the past week, 4.29% over the past month, and 21.26% over the past year.
Final Thoughts
Despite a decline in EPS over the last five years, Killam Apartment REIT has still delivered an attractive TSR to its shareholders, largely due to its dividend payments. While the stock has experienced a dip in the last year, it’s important to focus on the company’s fundamentals and long-term growth trend. As always, investors should perform due diligence and be aware of any warning signs before making any investment decisions.
STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.
