First Western Financial (NASDAQ:MYFW) shareholders have earned a 8.4% CAGR over the last five years

The main point of investing for the long term is to make money. Furthermore, you’d generally like to see the share price rise faster than the market. Unfortunately for shareholders, while the First Western Financial, Inc. (NASDAQ:MYFW) share price is up 49% in the last five years, that’s less than the market return. Some buyers are laughing, though, with an increase of 27% in the last year.

With that in mind, it’s worth seeing if the company’s underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 Western Financial managed to grow its earnings per share at 1.3% a year. This EPS growth is slower than the share price growth of 8% 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. And that’s hardly shocking given the track record of growth.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that First Western Financial has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

We’re pleased to report that First Western Financial shareholders have received a total shareholder return of 27% over one year. That’s better than the annualised return of 8% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. To that end, you should be aware of the 1 warning sign we’ve spotted with First Western Financial .

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.