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Reflecting on HMN Financial's (NASDAQ:HMNF) Share Price Returns Over The Last Year

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Simply Wall St
·3 min read
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The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in HMN Financial, Inc. (NASDAQ:HMNF) have tasted that bitter downside in the last year, as the share price dropped 35%. That's well below the market return of 11%. At least the damage isn't so bad if you look at the last three years, since the stock is down 24% in that time. The falls have accelerated recently, with the share price down 14% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

Check out our latest analysis for HMN Financial

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Unhappily, HMN Financial had to report a 24% decline in EPS over the last year. The share price decline of 35% is actually more than the EPS drop. So it seems the market was too confident about the business, a year ago. The P/E ratio of 8.45 also points to the negative market sentiment.

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


We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

Investors in HMN Financial had a tough year, with a total loss of 35%, against a market gain of about 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 2.7% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand HMN Financial better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for HMN Financial you should know about.

HMN Financial is not the only stock that insiders are buying. 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 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@simplywallst.com.