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It's easy to feel disappointed if you buy a stock that goes down. But in the short term the market is a voting machine, and the share price movements may not reflect the underlying business performance. The First Seacoast Bancorp, Inc. (NASDAQ:FSEA) share price is down 10% in the last year. But that actually beats the market decline of 22%. The silver lining (for longer term investors) is that the stock is still 1.1% higher than it was three years ago.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
Check out our latest analysis for First Seacoast Bancorp
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Unhappily, First Seacoast Bancorp had to report a 30% decline in EPS over the last year. This fall in the EPS is significantly worse than the 10% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into First Seacoast Bancorp's key metrics by checking this interactive graph of First Seacoast Bancorp's earnings, revenue and cash flow.
A Different Perspective
First Seacoast Bancorp shareholders may not have made money over the last year, but their total loss of 10% isn't as bad as the market loss of around 10%. Shareholders who have held for three years might be relatively sanguine about the recent weakness, given they have made 0.4% per year for three years. Given the three year returns are better than the return over the last year, it might be that the broader market has weighed on the stock recently. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for First Seacoast Bancorp that you should be aware of.
We will like First Seacoast Bancorp better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.