Investors in Banco del Bajío Institución de Banca Múltiple (BMV:BBAJIOO) have seen decent returns of 98% over the past three years

While Banco del Bajío, S.A., Institución de Banca Múltiple (BMV:BBAJIOO) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 21% in the last quarter. But don't let that distract from the very nice return generated over three years. To wit, the share price did better than an index fund, climbing 45% during that period.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

See 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.

During three years of share price growth, Banco del Bajío Institución de Banca Múltiple achieved compound earnings per share growth of 53% per year. This EPS growth is higher than the 13% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat. This cautious sentiment is reflected in its (fairly low) P/E ratio of 5.41.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It is of course excellent to see how Banco del Bajío Institución de Banca Múltiple has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Banco del Bajío Institución de Banca Múltiple the TSR over the last 3 years was 98%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While it's never nice to take a loss, Banco del Bajío Institución de Banca Múltiple shareholders can take comfort that , including dividends,their trailing twelve month loss of 0.8% wasn't as bad as the market loss of around 1.7%. Longer term investors wouldn't be so upset, since they would have made 14%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Banco del Bajío Institución de Banca Múltiple better, we need to consider many other factors. Even so, be aware that Banco del Bajío Institución de Banca Múltiple is showing 3 warning signs in our investment analysis , and 1 of those is potentially serious...

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 Mexican exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com