The past three-year earnings decline for First Western Financial (NASDAQ:MYFW) likely explains shareholders long-term losses

It's nice to see the First Western Financial, Inc. (NASDAQ:MYFW) share price up 20% in a week. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 37% in the last three years, falling well short of the market return.

While the stock has risen 20% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Check out our latest analysis for First Western Financial

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

First Western Financial saw its EPS decline at a compound rate of 52% per year, over the last three years. This fall in the EPS is worse than the 14% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It might be well worthwhile taking a look at our free report on First Western Financial's earnings, revenue and cash flow.

A Different Perspective

Investors in First Western Financial had a tough year, with a total loss of 4.1%, against a market gain of about 21%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 3% 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with First Western Financial , and understanding them should be part of your investment process.

Of course First Western Financial may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.