Business First Bancshares, Inc. (NASDAQ:BFST) shareholders might be concerned after seeing the share price drop 15% in the last quarter. But that scarcely detracts from the really solid long term returns generated by the company over five years. We think most investors would be happy with the 120% return, over that period. To some, the recent pullback wouldn’t be surprising after such a fast rise. Only time will tell if there is still too much optimism currently reflected in the share price.
Although Business First Bancshares has shed US$66m from its market cap this week, let’s take a look at its longer term fundamental trends and see if they’ve driven returns.
Check out our latest analysis for Business First Bancshares
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over half a decade, Business First Bancshares managed to grow its earnings per share at 2.5% a year. This EPS growth is slower than the share price growth of 17% per year, over the same period. So it’s fair to assume the market has a higher opinion of the business than it did five years ago. That’s not necessarily surprising considering the five-year track record of earnings growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
This free interactive report on Business First Bancshares’ earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Business First Bancshares, it has a TSR of 148% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
Business First Bancshares shareholders have received returns of 10% over twelve months (even including dividends), which isn’t far from the general market return. It has to be noted that the recent return falls short of the 20% shareholders have gained each year, over half a decade. More recently, the share price growth has slowed. But it has to be said the overall picture is one of good long term and short term performance. Arguably that makes Business First Bancshares a stock worth watching. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We’ve identified 1 warning sign with Business First Bancshares , and understanding them should be part of your investment process.
