The past year for Signature Bank (NASDAQ:SBNY) investors has not been profitable
The nature of investing is that you win some, and you lose some. And unfortunately for Signature Bank (NASDAQ:SBNY) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 69%. At least the damage isn't so bad if you look at the last three years, since the stock is down 16% in that time. Shareholders have had an even rougher run lately, with the share price down 26% in the last 90 days.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
Check out our latest analysis for Signature Bank
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Even though the Signature Bank share price is down over the year, its EPS actually improved. It's quite possible that growth expectations may have been unreasonable in the past.
It's fair to say that the share price does not seem to be reflecting the EPS growth. But we might find some different metrics explain the share price movements better.
Given the yield is quite low, at 2.0%, we doubt the dividend can shed much light on the share price. Signature Bank's revenue is actually up 43% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Signature Bank is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Signature Bank in this interactive graph of future profit estimates.
A Different Perspective
While the broader market lost about 19% in the twelve months, Signature Bank shareholders did even worse, losing 68% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. To that end, you should learn about the 3 warning signs we've spotted with Signature Bank (including 1 which is a bit concerning) .
Of course Signature Bank may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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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