Stock Analysis

Investors who have held Columbia Banking System (NASDAQ:COLB) over the last year have watched its earnings decline along with their investment

Published
NasdaqGS:COLB
Source: Shutterstock

While not a mind-blowing move, it is good to see that the Columbia Banking System, Inc. (NASDAQ:COLB) share price has gained 13% in the last three months. But in truth the last year hasn't been good for the share price. After all, the share price is down 29% in the last year, significantly under-performing the market.

While the last year has been tough for Columbia Banking System shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

View our latest analysis for Columbia Banking System

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

Unhappily, Columbia Banking System had to report a 27% decline in EPS over the last year. This proportional reduction in earnings per share isn't far from the 29% decrease in the share price. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price is remains a similar multiple of the EPS, suggesting the outlook remains the same.

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

earnings-per-share-growth
NasdaqGS:COLB Earnings Per Share Growth December 3rd 2023

We know that Columbia Banking System has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Columbia Banking System's balance sheet strength is a great place to start, if you want to investigate the stock further.

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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Columbia Banking System the TSR over the last 1 year was -24%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Investors in Columbia Banking System had a tough year, with a total loss of 24% (including dividends), against a market gain of about 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 0.9% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Columbia Banking System better, we need to consider many other factors. For example, we've discovered 2 warning signs for Columbia Banking System (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

We will like Columbia Banking System 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 American exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether Columbia Banking System is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis