What Type Of Returns Would Affinity Bancshares'(NASDAQ:AFBI) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?
It is doubtless a positive to see that the Affinity Bancshares, Inc. (NASDAQ:AFBI) share price has gained some 44% in the last three months. But that cannot eclipse the less-than-impressive returns over the last three years. Truth be told the share price declined 10% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.
View our latest analysis for Affinity Bancshares
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.
Although the share price is down over three years, Affinity Bancshares actually managed to grow EPS by 50% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.
It's strange to see such muted share price performance despite sustained growth. Perhaps a clue lies in other metrics. So we'll have to take a look at other metrics to try to understand the price action.
Revenue is actually up 14% over the three years, so the share price drop doesn't seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching Affinity Bancshares more closely, as sometimes stocks fall unfairly. This could present an opportunity.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
The last twelve months weren't great for Affinity Bancshares shares, which cost holders 10%, while the market was up about 27%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 3% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand Affinity Bancshares better, we need to consider many other factors. Even so, be aware that Affinity Bancshares is showing 4 warning signs in our investment analysis , and 1 of those can't be ignored...
Affinity Bancshares 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.
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