Esquire Financial Holdings, Inc. (NASDAQ:ESQ) shareholders should be happy to see the share price up 14% in the last month. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 27% in a year, falling short of the returns you could get by investing in an index fund.
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.
Unfortunately Esquire Financial Holdings reported an EPS drop of 4.4% for the last year. The share price decline of 27% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The P/E ratio of 10.79 also points to the negative market sentiment.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
The last twelve months weren't great for Esquire Financial Holdings shares, which cost holders 27%, while the market was up about 25%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 3% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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 decide to trade Esquire Financial Holdings, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted
What are the risks and opportunities for Esquire Financial Holdings?
Trading at 8.9% below our estimate of its fair value
Earnings are forecast to grow 16.22% per year
Earnings grew by 59.1% over the past year
Significant insider selling over the past 3 months
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.
Esquire Financial Holdings
Esquire Financial Holdings, Inc. operates as the bank holding company for Esquire Bank, National Association that provides commercial banking products and services to legal industry and small businesses, and commercial and retail customers in the United States.
Flawless balance sheet with solid track record.