The First Abu Dhabi Bank P.J.S.C (ADX:FAB) Share Price Is Down 24% So Some Shareholders Are Getting Worried

It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by First Abu Dhabi Bank P.J.S.C. (ADX:FAB) shareholders over the last year, as the share price declined 24%. That's disappointing when you consider the market declined 11%. On the other hand, the stock is actually up 7.2% over three years. Unhappily, the share price slid 1.4% in the last week.

Check out our latest analysis for First Abu Dhabi Bank P.J.S.C

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 Abu Dhabi Bank P.J.S.C had to report a 3.0% decline in EPS over the last year. This reduction in EPS is not as bad as the 24% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business. The P/E ratio of 10.89 also points to the negative market sentiment.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for First Abu Dhabi Bank P.J.S.C the TSR over the last year was -20%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

The last twelve months weren't great for First Abu Dhabi Bank P.J.S.C shares, which performed worse than the market, costing holders 20% , including dividends . The market shed around 11%, no doubt weighing on the stock price. Investors are up over three years, booking 8.2% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. It's always interesting to track share price performance over the longer term. But to understand First Abu Dhabi Bank P.J.S.C better, we need to consider many other factors. Even so, be aware that First Abu Dhabi Bank P.J.S.C is showing 2 warning signs in our investment analysis , you should know about...

We will like First Abu Dhabi Bank P.J.S.C 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 AE exchanges.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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