Investing in Home Federal Bancorp of Louisiana (NASDAQ:HFBL) five years ago would have delivered you a 72% gain

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Passive investing in index funds can generate returns that roughly match the overall market. But the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, the Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL) share price is 56% higher than it was five years ago, which is more than the market average. Also positive is the 5.1% share price rise over the last year.

Now it’s worth having a look at the company’s fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

View our latest analysis for Home Federal Bancorp of Louisiana

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, Home Federal Bancorp of Louisiana managed to grow its earnings per share at 11% a year. This EPS growth is higher than the 9% average annual increase in the share price. So it seems the market isn’t so enthusiastic about the stock these days.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth

It might be well worthwhile taking a look at our free report on Home Federal Bancorp of Louisiana’s earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. In the case of Home Federal Bancorp of Louisiana, it has a TSR of 72% for the last 5 years. That exceeds its share price return that we previously mentioned. And there’s no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It’s nice to see that Home Federal Bancorp of Louisiana shareholders have received a total shareholder return of 7.3% over the last year. Of course, that includes the dividend. Having said that, the five-year TSR of 11% a year, is even better. Potential buyers might understandably feel they’ve missed the opportunity, but it’s always possible business is still firing on all cylinders. It’s always interesting to track share price performance over the longer term. But to understand Home Federal Bancorp of Louisiana better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we’ve spotted with Home Federal Bancorp of Louisiana .

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.

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

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

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.

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