If You Had Bought Bank of Marin Bancorp (NASDAQ:BMRC) Shares Five Years Ago You’d Have Made 51%

It might be of some concern to shareholders to see the Bank of Marin Bancorp (NASDAQ:BMRC) share price down 15% in the last month. But the silver lining is the stock is up over five years. In that time, it is up 51%, which isn’t bad, but is below the market return of 60%.

Check out our latest analysis for Bank of Marin Bancorp

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over half a decade, Bank of Marin Bancorp managed to grow its earnings per share at 8.4% a year. That makes the EPS growth particularly close to the yearly share price growth of 8.6%. That suggests that the market sentiment around the company hasn’t changed much over that time. Indeed, it would appear the share price is reacting to the EPS.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

NasdaqCM:BMRC Past and Future Earnings, March 4th 2020
NasdaqCM:BMRC Past and Future Earnings, March 4th 2020

This free interactive report on Bank of Marin Bancorp’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Bank of Marin Bancorp the TSR over the last 5 years was 66%, 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

Bank of Marin Bancorp shareholders are down 9.3% for the year (even including dividends) , but the market itself is up 9.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn’t be so upset, since they would have made 11%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. If you would like to research Bank of Marin Bancorp in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.