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If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can significantly boost your returns by picking above-average stocks. For example, the Southern States Bancshares, Inc. (NASDAQ:SSBK) share price is up 32% in the last 1 year, clearly besting the market decline of around 20% (not including dividends). That's a solid performance by our standards! Southern States Bancshares hasn't been listed for long, so it's still not clear if it is a long term winner.
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.
Check out our latest analysis for Southern States 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...' 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.
Southern States Bancshares was able to grow EPS by 2.3% in the last twelve months. This EPS growth is significantly lower than the 32% increase in the share price. So it's fair to assume the market has a higher opinion of the business than it a year ago.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What About Dividends?
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Southern States Bancshares' TSR for the last 1 year was 34%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's nice to see that Southern States Bancshares shareholders have gained 34% over the last year, including dividends. A substantial portion of that gain has come in the last three months, with the stock up 15% in that time. This suggests the company is continuing to win over new investors. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.