It's normal to be annoyed when stock you own has a declining share price. But in the short term the market is a voting machine, and the share price movements may not reflect the underlying business performance. The Zions Bancorporation, National Association (NASDAQ:ZION) is down 22% over a year, but the total shareholder return is -20% once you include the dividend. And that total return actually beats the market decline of 22%. The silver lining (for longer term investors) is that the stock is still 9.9% higher than it was three years ago. More recently, the share price has dropped a further 16% in a month. But this could be related to poor market conditions -- stocks are down 12% in the same time.
After losing 9.8% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Unhappily, Zions Bancorporation National Association had to report a 19% decline in EPS over the last year. We note that the 22% share price drop is very close to the EPS drop. So it seems that the market sentiment has not changed much, despite the weak results. Rather, the share price has approximately tracked EPS growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
While it's never nice to take a loss, Zions Bancorporation National Association shareholders can take comfort that , including dividends,their trailing twelve month loss of 20% wasn't as bad as the market loss of around 22%. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Zions Bancorporation National Association better, we need to consider many other factors. For example, we've discovered 1 warning sign for Zions Bancorporation National Association that you should be aware of before investing here.
Zions Bancorporation National Association is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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. 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
