If You Had Bought Waterstone Financial (NASDAQ:WSBF) Shares A Year Ago You'd Have Earned 39% Returns
We believe investing is smart because history shows that stock markets go higher in the long term. But not every stock you buy will perform as well as the overall market. Over the last year the Waterstone Financial, Inc. (NASDAQ:WSBF) share price is up 39%, but that's less than the broader market return. However, the stock hasn't done so well in the longer term, with the stock only up 13% in three years.
See our latest analysis for Waterstone Financial
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Waterstone Financial was able to grow EPS by 191% in the last twelve months. It's fair to say that the share price gain of 39% did not keep pace with the EPS growth. So it seems like the market has cooled on Waterstone Financial, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 4.93.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how Waterstone Financial has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Waterstone Financial stock, you should check out this FREE detailed report on its balance sheet.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Waterstone Financial's TSR for the last year was 46%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
Waterstone Financial shareholders have received returns of 46% over twelve months (even including dividends), which isn't far from the general market return. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 12%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. It's always interesting to track share price performance over the longer term. But to understand Waterstone Financial better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Waterstone Financial (of which 1 is significant!) you should know about.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
