First Community Corporation (NASDAQ:FCCO) shareholders might be concerned after seeing the share price drop 11% in the last month. On the bright side the share price is up over the last half decade. In that time, it is up 57%, which isn’t bad, but is below the market return of 148%.
So let’s assess the underlying fundamentals over the last 5 years and see if they’ve moved in lock-step with shareholder returns.
See our latest analysis for First Community
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.
Over half a decade, First Community managed to grow its earnings per share at 4.6% a year. This EPS growth is lower than the 9% average annual increase in the share price. So it’s fair to assume the market has a higher opinion of the business than it did five years ago. And that’s hardly shocking given the track record of growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that First Community has improved its bottom line lately, but is it going to grow revenue? Check if analysts think First Community will grow revenue in the future.
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of First Community, it has a TSR of 81% for the last 5 years. That exceeds its share price return that we previously mentioned. And there’s no prize for guessing that the dividend payments largely explain the divergence!
It’s nice to see that First Community shareholders have received a total shareholder return of 38% over the last year. That’s including the dividend. That gain is better than the annual TSR over five years, which is 13%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before deciding if you like the current share price, check how First Community scores on these 3 valuation metrics.
