As an investor, it’s worth striving to ensure that your overall portfolio beats the market average. But it’s virtually certain that sometimes you’ll buy stocks that are below average market returns. Unfortunately, this has been the case for longer City Union Bank Limited (NSE:CUB) shareholders, as the stock price has fallen 25% over the past three years, well below the market return of around 73%. The falls have accelerated recently, with the stock price falling 17% in the past three months. We note that the company released results quite recently; and the market is hardly thrilled. You can view the latest figures in our corporate report.
With the stock down 4.0% in the past week, it’s worth taking a look at the trade performance and seeing if there are any red flags.
See our latest analysis for City Union Bank
In his test The Graham-and-Doddsville super-investors Warren Buffett has described how stock prices don’t always rationally reflect a company’s value. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
City Union Bank has seen its EPS decline at a compound rate of 1.1% per annum, over the past three years. The 9% share price decline is actually more pronounced than the EPS slide. So it seems that the market was overconfident in the company in the past.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
This free City Union Bank’s Interactive Earnings, Revenue and Cash Flow Report is a great place to start if you want to do more research on the stock.
A different perspective
City Union Bank shareholders are down 16% on the year (even including dividends), but the market itself is up 27%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer-term investors wouldn’t be so upset, as they would have gained 3%, every year, over five years. It could be that the recent selloff is an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. For example, we have identified 1 warning sign for City Union Bank which you should be aware of.
Sure City Union Bank may not be the best stock to buy. So you might want to see this free collection of growth values.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on IN exchanges.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.