Did Community First Bancshares’s (NASDAQ:CFBI) Share Price Deserve to Gain 11%?

There’s no doubt that investing in the stock market is a truly brilliant way to build wealth. But if when you choose to buy stocks, some of them will be below average performers. For example, the Community First Bancshares, Inc. (NASDAQ:CFBI), share price is up over the last year, but its gain of 11% trails the market return. We’ll need to follow Community First Bancshares for a while to get a better sense of its share price trend, since it hasn’t been listed for particularly long.

View 2 warning signs we detected for Community First Bancshares

Given that Community First Bancshares didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year Community First Bancshares saw its revenue shrink by 3.9%. The lacklustre gain of 11% over twelve months, is not a bad result given the falling revenue. We’d want to see progress to profitability before getting too interested in this stock.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

NasdaqCM:CFBI Income Statement, January 9th 2020
NasdaqCM:CFBI Income Statement, January 9th 2020

We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Community First Bancshares’s earnings, revenue and cash flow.

A Different Perspective

We’re happy to report that Community First Bancshares are up 11% over the year. While it’s always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 27%. Shareholders are doubtless excited that the stock price has been doing even better lately, with a gain of 18% in just ninety days. The very recent increase in the share price could be evidence that the narrative is changing for the better due to fundamental improvements. 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. For example, we’ve discovered 2 warning signs for Community First Bancshares (of which 1 is major) which any shareholder or potential investor should be aware of.

But note: Community First Bancshares may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.