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The Parke Bancorp (NASDAQ:PKBK) Share Price Has Gained 179%, So Why Not Pay It Some Attention?

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When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. One great example is Parke Bancorp, Inc. (NASDAQ:PKBK) which saw its share price drive 179% higher over five years. In the last week the share price is up 4.5%.

Check out our latest analysis for Parke Bancorp

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 five years of share price growth, Parke Bancorp achieved compound earnings per share (EPS) growth of 19% per year. This EPS growth is reasonably close to the 23% average annual increase in the share price. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Indeed, it would appear the share price is reacting to the EPS.

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

NasdaqCM:PKBK Past and Future Earnings, February 21st 2020
NasdaqCM:PKBK Past and Future Earnings, February 21st 2020

It might be well worthwhile taking a look at our free report on Parke Bancorp's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. We note that for Parke Bancorp the TSR over the last 5 years was 215%, 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!

A Different Perspective

Parke Bancorp provided a TSR of 10% over the last twelve months. Unfortunately this falls short of the market return. If we look back over five years, the returns are even better, coming in at 26% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. It's always interesting to track share price performance over the longer term. But to understand Parke Bancorp better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with Parke Bancorp (including 1 which is shouldn't be ignored) .

We will like Parke Bancorp better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.