While it may not be enough for some shareholders, we think it is good to see the Randolph Bancorp, Inc. (NASDAQ:RNDB) share price up 18% in a single quarter. But in truth the last year hasn't been good for the share price. In fact the stock is down 26% in the last year, well below the market return.
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 Randolph Bancorp saw its earnings per share increase strongly. The rate of growth may not be sustainable, but it is still really positive. So we are surprised the share price is down. So it's worth taking a look at some other metrics.
Randolph Bancorp's revenue is actually up 40% 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.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. You can see what analysts are predicting for Randolph Bancorp in this interactive graph of future profit estimates.
A Different Perspective
Randolph Bancorp shareholders are down 26% for the year, but the broader market is up 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 7.0% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It's always interesting to track share price performance over the longer term. But to understand Randolph Bancorp better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Randolph Bancorp you should be aware of.
Randolph Bancorp 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.
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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