Those who invested in Enviva (NYSE:EVA) five years ago are up 199%
Whereas Enviva Inc. (NYSE:EVA) Shareholders are likely generally happy the stock hasn’t had a particularly good run recently, with the stock price dropping 30% in the last quarter. But in stark contrast, returns over the past half-decade have impressed. Indeed, the stock price increased by 107% during this period. Generally speaking, long-term returns will give you a better idea of the quality of the business than short-term ones. Of course, that doesn’t necessarily mean it’s cheap now.
Let’s take a look at the longer term underlying fundamentals and see if they have been consistent with shareholder returns.
Check out our latest analysis for Enviva
Enviva has not been profitable for the last twelve months, we are unlikely to see a strong correlation between its share price and its earnings per share (EPS). Income is arguably our second best option. When a business is not making a profit, you generally expect to see good revenue growth. Some companies are ready to postpone profitability to increase revenue faster, but in this case, good revenue growth is expected.
Over the past half-decade, Enviva can boast revenue growth of 17% per year. That’s way above most nonprofits. Meanwhile, its share price performance certainly reflects the strong growth, given that the share price rose 16% pa, compounded, during the period. This suggests that the market has indeed recognized the progress made by the company. In our opinion, Enviva is worth investigating – it may have its best days ahead of it.
The graph below illustrates the evolution of income and income over time (reveal the exact values by clicking on the image).
It is good to see that there has been significant insider buying over the past three months. This is a positive point. That said, we believe earnings and revenue growth trends are even more important factors to consider. You can see what analysts are predicting for Enviva in this interactive graph of future profit estimates.
What about dividends?
In addition to measuring share price performance, investors should also consider total shareholder return (TSR). TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. It can be said that the TSR gives a more complete picture of the return generated by a stock. In the case of Enviva, it has a TSR of 199% over 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
It is good to see that Enviva has rewarded its shareholders with a total shareholder return of 13% over the past twelve months. This includes the dividend. However, the five-year TSR of 25% per year is even more impressive. The pessimistic view would be that the stock has its best days behind it, but on the other hand, the price could simply moderate while the business itself continues to operate. It is always interesting to follow the evolution of the share price over the long term. But to better understand Enviva, we need to consider many other factors. For example, we have identified 4 warning signs for Enviva (2 are a bit of a concern) that you should be aware of.
There are many other companies whose insiders buy shares. You probably do 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.