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Investing in Columbia Financial (NASDAQ:CLBK) three years ago would have delivered you a 36% gain

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Buying a low-cost index fund will get you the average market return. But in any diversified portfolio of stocks, you'll see some that fall short of the average. For example, the Columbia Financial, Inc. (NASDAQ:CLBK) share price return of 36% over three years lags the market return in the same period. Some buyers are laughing, though, with an increase of 26% in the last year.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

Check out our latest analysis for Columbia 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).

During three years of share price growth, Columbia Financial achieved compound earnings per share growth of 105% per year. The average annual share price increase of 11% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
earnings-per-share-growth

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

A Different Perspective

Pleasingly, Columbia Financial's total shareholder return last year was 26%. So this year's TSR was actually better than the three-year TSR (annualized) of 11%. Given the track record of solid returns over varying time frames, it might be worth putting Columbia Financial on your watchlist. 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. Even so, be aware that Columbia Financial is showing 1 warning sign in our investment analysis , 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.