How Much Did Red River Bancshares'(NASDAQ:RRBI) Shareholders Earn From Share Price Movements Over The Last Year?

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by Red River Bancshares, Inc. (NASDAQ:RRBI) shareholders over the last year, as the share price declined 12%. That falls noticeably short of the market return of around 25%. Red River Bancshares may have better days ahead, of course; we've only looked at a one year period. The last week also saw the share price slip down another 12%. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

Check out our latest analysis for Red River Bancshares

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

Even though the Red River Bancshares share price is down over the year, its EPS actually improved. Of course, the situation might betray previous over-optimism about growth.

The divergence between the EPS and the share price is quite notable, during the year. But we might find some different metrics explain the share price movements better.

With a low yield of 0.5% we doubt that the dividend influences the share price much. Red River Bancshares' revenue is actually up 10% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So it makes a lot of sense to check out what analysts think Red River Bancshares will earn in the future (free profit forecasts).

A Different Perspective

While Red River Bancshares shareholders are down 12% for the year (even including dividends), the market itself is up 25%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 2.1% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for Red River Bancshares (1 shouldn't be ignored) that you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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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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.
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