County Bancorp, Inc. ( NASDAQ:ICBK ) shareholders should be happy to see the share price up 13% in the last month. But that doesn’t change the reality of under-performance over the last twelve months. The cold reality is that the stock has dropped 36% in one year, under-performing the market.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the unfortunate twelve months during which the County Bancorp share price fell, it actually saw its earnings per share (EPS) improve by 36%. It’s quite possible that growth expectations may have been unreasonable in the past. The divergence between the EPS and the share price is quite notable, during the year. So it’s well worth checking out some other metrics, too.
Given the yield is quite low, at 1.1%, we doubt the dividend can shed much light on the share price. County Bancorp managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don’t readily explain the share price drop, there might be an opportunity if the market has overreacted.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on County Bancorp
What about the Total Shareholder Return (TSR)?
Investors should note that there’s a difference between County Bancorp’s total shareholder return (TSR) and its share price change, which we’ve covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) and any discounted capital raisings offered to shareholders. Dividends have been really beneficial for County Bancorp shareholders, and that cash payout explains why its total shareholder loss of 36%, over the last year, isn’t as bad as the share price return.
A Different Perspective
The last twelve months weren’t great for County Bancorp shares, which cost holders 36%, including dividends, while the market was up about 4.0%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Fortunately the longer term story is brighter, with total returns averaging about 1.1% per year over three years. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares – and the price they paid.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org . 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. Thank you for reading.