UK markets close in 8 hours 1 minute
  • FTSE 100

    6,467.93
    +4.54 (+0.07%)
     
  • FTSE 250

    19,891.30
    +13.53 (+0.07%)
     
  • AIM

    1,067.75
    +0.68 (+0.06%)
     
  • GBP/EUR

    1.1050
    +0.0013 (+0.12%)
     
  • GBP/USD

    1.3405
    +0.0029 (+0.22%)
     
  • BTC-GBP

    14,491.19
    +316.73 (+2.23%)
     
  • CMC Crypto 200

    380.85
    +15.93 (+4.37%)
     
  • S&P 500

    3,669.01
    +6.56 (+0.18%)
     
  • DOW

    29,883.79
    +59.87 (+0.20%)
     
  • CRUDE OIL

    45.39
    +0.11 (+0.24%)
     
  • GOLD FUTURES

    1,842.60
    +12.40 (+0.68%)
     
  • NIKKEI 225

    26,809.37
    +8.39 (+0.03%)
     
  • HANG SENG

    26,728.50
    +195.92 (+0.74%)
     
  • DAX

    13,282.16
    -31.08 (-0.23%)
     
  • CAC 40

    5,569.10
    -13.91 (-0.25%)
     

If You Had Bought Stifel Financial (NYSE:SF) Shares Five Years Ago You'd Have Earned 35% Returns

Simply Wall St
·3-min read

If you buy and hold a stock for many years, you'd hope to be making a profit. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Stifel Financial Corp. (NYSE:SF) share price is up 35% in the last five years, that's less than the market return. Over the last twelve months the stock price has risen a very respectable 5.6%.

Check out our latest analysis for Stifel Financial

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.

Over half a decade, Stifel Financial managed to grow its earnings per share at 21% a year. This EPS growth is higher than the 6% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.50.

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

earnings-per-share-growth
earnings-per-share-growth

We consider it positive that insiders have made significant purchases in the last year. 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..

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Stifel Financial's TSR for the last 5 years was 39%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Stifel Financial provided a TSR of 6.9% over the last twelve months. But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 7% over half a decade It is possible that returns will improve along with the business fundamentals. 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. To that end, you should be aware of the 2 warning signs we've spotted with Stifel Financial .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.