The one-year shareholder returns and company earnings persist lower as Western Alliance Bancorporation (NYSE:WAL) stock falls a further 4.7% in past week
While it may not be enough for some shareholders, we think it is good to see the Western Alliance Bancorporation (NYSE:WAL) share price up 24% in a single quarter. But that is minimal compensation for the share price under-performance over the last year. After all, the share price is down 44% in the last year, significantly under-performing the market.
Since Western Alliance Bancorporation has shed US$208m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
Check out our latest analysis for Western Alliance Bancorporation
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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).
Unfortunately Western Alliance Bancorporation reported an EPS drop of 2.8% for the last year. This reduction in EPS is not as bad as the 44% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business. The P/E ratio of 4.46 also points to the negative market sentiment.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It might be well worthwhile taking a look at our free report on Western Alliance Bancorporation's earnings, revenue and cash flow.
A Different Perspective
Investors in Western Alliance Bancorporation had a tough year, with a total loss of 42% (including dividends), against a market gain of about 21%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for Western Alliance Bancorporation (1 is significant) that you should be aware of.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.
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