Stock Analysis

A Look At FFBW's (NASDAQ:FFBW) Share Price Returns

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NasdaqCM:FFBW
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While it may not be enough for some shareholders, we think it is good to see the FFBW, Inc. (NASDAQ:FFBW) share price up 11% in a single quarter. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 13% in a year, falling short of the returns you could get by investing in an index fund.

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To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Even though the FFBW share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.

It's fair to say that the share price does not seem to be reflecting the EPS growth. But we might find some different metrics explain the share price movements better.

FFBW's revenue is actually up 13% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NasdaqCM:FFBW Earnings and Revenue Growth January 11th 2021

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on FFBW's earnings, revenue and cash flow.

A Different Perspective

FFBW shareholders are down 13% for the year, but the broader market is up 26%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 2.0% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for FFBW that you should be aware of.

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.

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