Earnings and shareholder returns at South Indian Bank (NSE: SOUTHBANK) have trended down over the past five years, but the stock soared 20% last week
It is a pleasure to report that the The South Indian Bank Limited (NSE: SOUTHBANK) is up 38% in the last quarter. But that can’t change the reality that over the longer term (five years) the returns have been really quite dismal. In fact, the stock price has rather fallen, down about 67% during this time. So we don’t know if the recent rebound is anything to celebrate. However, in the best case (far from fait accompli), this performance improvement can be maintained.
With the stock up 20% last week but long-term shareholders still in the red, let’s see what the fundamentals can tell us.
Check out our latest analysis for South Indian Bank
To paraphrase Benjamin Graham: in the short term, the market is a voting machine, but in the long term, it is a weighing machine. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
In five years of share price growth, South Indian Bank went from loss to profitability. Most would consider this a good thing, so it’s counterintuitive to see the stock price go down. Other metrics can better explain the stock price movement.
Unlike the stock price, revenue actually grew 1.8% annually over the five-year period. A closer look at revenue and earnings may or may not explain why the stock price is languishing; there might be an opportunity.
The image below shows how earnings and income have tracked over time (if you click on the image you can see more details).
If you are thinking of buying or selling shares of South Indian Bank, you should check out this FREE detailed report on its balance sheet.
A different perspective
While the broader market gained around 6.3% last year, South Indian Bank shareholders lost 3.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer-term shareholders are suffering more, given the 11% loss distributed over the past five years. We would like clear information suggesting that the company will grow, before assuming that the share price will stabilize. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. To this end, you should be aware of the 1 warning sign we spotted with South Indian Bank.
Sure South Indian Bank may not be the best stock to buy. So you might want to see this free collection of growth values.
Please note that the market returns quoted in this article reflect the average market-weighted returns of the stocks currently trading on the IN exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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