Salem Media Group (NASDAQ:SALM) pulls back 12% this week, but still delivers shareholders favorable 67% return over 1 year

By
Simply Wall St
Published
January 21, 2022
NasdaqGM:SALM
Source: Shutterstock

The last three months have been tough on Salem Media Group, Inc. (NASDAQ:SALM) shareholders, who have seen the share price decline a rather worrying 38%. While that might be a setback, it doesn't negate the nice returns received over the last twelve months. To wit, it had solidly beat the market, up 67%.

In light of the stock dropping 12% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

See our latest analysis for Salem Media Group

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. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year Salem Media Group grew its earnings per share, moving from a loss to a profit.

We think the growth looks very prospective, so we're not surprised the market liked it too. Generally speaking the profitability inflection point is a great time to research a company closely, lest you miss an opportunity to profit.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
NasdaqGM:SALM Earnings Per Share Growth January 21st 2022

We know that Salem Media Group has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

A Different Perspective

It's nice to see that Salem Media Group shareholders have received a total shareholder return of 67% over the last year. That certainly beats the loss of about 8% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Salem Media Group better, we need to consider many other factors. For instance, we've identified 5 warning signs for Salem Media Group (2 are a bit concerning) that you should be aware of.

But note: Salem Media Group may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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