Banco del Bajío Institución de Banca Múltiple's (BMV:BBAJIOO) Shareholders Are Down 34% On Their Shares

As an investor its worth striving to ensure your overall portfolio beats the market average. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Banco del Bajío, S.A., Institución de Banca Múltiple (BMV:BBAJIOO) shareholders, since the share price is down 34% in the last three years, falling well short of the market decline of around 7.3%. It's up 2.6% in the last seven days.

Check out our latest analysis for Banco del Bajío Institución de Banca Múltiple

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Banco del Bajío Institución de Banca Múltiple saw its EPS decline at a compound rate of 5.1% per year, over the last three years. This reduction in EPS is slower than the 13% annual reduction in the share price. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 9.06.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Banco del Bajío Institución de Banca Múltiple's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. We note that Banco del Bajío Institución de Banca Múltiple's TSR, at -30% is higher than its share price return of -34%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.

A Different Perspective

Banco del Bajío Institución de Banca Múltiple shareholders are up 20% for the year. It's always nice to make money but this return falls short of the market return which was about 29% for the year. The silver lining is that the recent rise is far preferable to the annual loss of 9% that shareholders have suffered over the last three years. It could well be that the business is stabilizing. 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. To that end, you should be aware of the 1 warning sign we've spotted with Banco del Bajío Institución de Banca Múltiple .

But note: Banco del Bajío Institución de Banca Múltiple 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 MX 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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