Diamondback Energy, Inc. (NASDAQ:FANG) shareholders might be concerned after seeing the share price drop 12% in the last week. But that doesn’t change the reality that over twelve months the stock has done really well. To wit, it had solidly beat the market, up 58%.

Although Diamondback Energy has shed US$3.1b from its market cap this week, let’s take a look at its longer term fundamental trends and see if they’ve driven returns.

View our latest analysis for Diamondback Energy

To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year Diamondback Energy grew its earnings per share, moving from a loss to a profit.

The result looks like a strong improvement to us, so we’re not surprised the market likes the growth. Generally speaking the profitability inflection point is a great time to research a company closely, lest you miss an opportunity to profit.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

earnings-per-share-growth

It is of course excellent to see how Diamondback Energy has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Diamondback Energy stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. As it happens, Diamondback Energy’s TSR for the last 1 year was 64%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

We’re pleased to report that Diamondback Energy shareholders have received a total shareholder return of 64% over one year. And that does include the dividend. That gain is better than the annual TSR over five years, which is 6%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It’s always interesting to track share price performance over the longer term. But to understand Diamondback Energy better, we need to consider many other factors. Like risks, for instance. Every company has them, and we’ve spotted 4 warning signs for Diamondback Energy (of which 1 can’t be ignored!) you should know about.

If you are like me, then you will 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 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.