First Interstate BancSystem (NASDAQ:FIBK) sheds US$120m, company earnings and investor returns have been trending downwards for past three years

While not a mind-blowing move, it is good to see that the First Interstate BancSystem, Inc. (NASDAQ:FIBK) share price has gained 11% in the last three months. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 25% in the last three years, significantly under-performing the market.

If the past week is anything to go by, investor sentiment for First Interstate BancSystem isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for First Interstate BancSystem

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

First Interstate BancSystem saw its EPS decline at a compound rate of 7.4% per year, over the last three years. The share price decline of 9% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on First Interstate BancSystem's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for First Interstate BancSystem the TSR over the last 3 years was -11%, 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

First Interstate BancSystem shareholders have received returns of 32% over twelve months (even including dividends), which isn't far from the general market return. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 0.3%, which was endured over half a decade. While 'turnarounds seldom turn' there are green shoots for First Interstate BancSystem. It's always interesting to track share price performance over the longer term. But to understand First Interstate BancSystem better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for First Interstate BancSystem you should be aware of.

First Interstate BancSystem is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been 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.