It hasn't been the best quarter forFederal Agricultural Mortgage Corporation(NYSE:AGM) shareholders, since the share price has fallen 19% in that time. On the bright side the share price is up over the last half decade. However we are not very impressed because the share price is only up 65%, less than the market return of 79%.
Since the long term performance has been good but there's been a recent pullback of 5.5%, let's check if the fundamentals match the share price.
Check out our latest analysis for Federal Agricultural Mortgage
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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, Federal Agricultural Mortgage managed to grow its earnings per share at 10% a year. That makes the EPS growth particularly close to the yearly share price growth of 10%. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Rather, the share price has approximately tracked EPS growth.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).NYSE:AGM Earnings Per Share Growth May 13th 2022
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..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. We note that for Federal Agricultural Mortgage the TSR over the last 5 years was 96%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!A Different Perspective
We're pleased to report that Federal Agricultural Mortgage shareholders have received a total shareholder return of 2.0% over one year. And that does include the dividend. Having said that, the five-year TSR of 14% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Federal Agricultural Mortgage is showing1 warning sign in our investment analysis, you should know about...
Federal Agricultural Mortgage is not the only stock insiders are buying. So take a peek at thisfreelist of growing companies with insider buying.
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.