Columbia Financial (NASDAQ:CLBK) shareholders notch a 2.6% CAGR over 5 years, yet earnings have been shrinking

When you buy and hold a stock for the long term, you definitely want it to provide a positive return. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Columbia Financial, Inc. (NASDAQ:CLBK) share price is up 14% in the last five years, that's less than the market return. The last year hasn't been great either, with the stock up just 0.7%.

The past week has proven to be lucrative for Columbia Financial investors, so let's see if fundamentals drove the company's five-year performance.

See our latest analysis for Columbia Financial

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, Columbia Financial actually saw its EPS drop 17% per year.

The strong decline in earnings per share suggests the market isn't using EPS to judge the company. The falling EPS doesn't correlate with the climbing share price, so it's worth taking a look at other metrics.

On the other hand, Columbia Financial's revenue is growing nicely, at a compound rate of 4.1% over the last five years. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

This free interactive report on Columbia Financial's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Columbia Financial shareholders gained a total return of 0.7% during the year. But that was short of the market average. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 3% over five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. 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. Take risks, for example - Columbia Financial has 1 warning sign we think you should be aware of.

We will like Columbia Financial better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 American 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.