<!-- HTML_TAG_START -->NasdaqCM:CFBK Earnings Per Share Growth December 22nd 2024<!-- HTML_TAG_END -->
If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can do a lot better than that by buying good quality businesses for attractive prices. For example, the CF Bankshares Inc. (NASDAQ:CFBK) share price is up 82% in the last five years, slightly above the market return. It’s also good to see a healthy gain of 33% in the last year.
Now it’s worth having a look at the company’s fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for CF Bankshares
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 five years of share price growth, CF Bankshares achieved compound earnings per share (EPS) growth of 1.6% per year. This EPS growth is slower than the share price growth of 13% per year, over the same period. So it’s fair to assume the market has a higher opinion of the business than it did five years ago. And that’s hardly shocking given the track record of growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
This free interactive report on CF Bankshares’ earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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 CF Bankshares the TSR over the last 5 years was 90%, 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!
It’s good to see that CF Bankshares has rewarded shareholders with a total shareholder return of 35% in the last twelve months. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 14%. 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. 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. Like risks, for instance. Every company has them, and we’ve spotted 2 warning signs for CF Bankshares (of which 1 is concerning!) you should know about.
