First International Bank of Israel (TLV:FIBI) investors will be pleased with their strong 171% return over the past five years

The worst outcome after buying shares in a company (assuming there is no leverage) would be if you lost all the money you invested. But on the bright side, you can earn way more than 100% on a really good deed. A good example is First International Bank of Israel Ltd (TLV:FIBI) which has seen its stock price climb 118% over five years. We note that the stock price has risen 2.1% over the past seven days.

Let’s take a look at the longer term underlying fundamentals and see if they have been consistent with shareholder returns.

Check out our latest analysis for First International Bank of Israel

While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying trading performance. An imperfect but simple way to examine how a company’s market perception has changed is to compare the evolution of earnings per share (EPS) with the movement of the share price.

In five years of share price growth, First International Bank of Israel has achieved compound earnings per share (EPS) growth of 21% per year. This EPS growth is greater than the average annual share price increase of 17%. One could therefore conclude that the broader market has become more cautious towards the stock. The reasonably low P/E ratio of 10.01 also suggests market apprehension.

The graph below illustrates the evolution of EPS over time (reveal the exact values ​​by clicking on the image).

TASE: FIBI Earnings Per Share Growth August 2, 2022

It’s probably worth noting that the CEO is paid less than the median at companies of a similar size. But while it’s still worth checking out CEO compensation, the really important question is whether the company can increase its profits in the future. Before buying or selling a stock, we always recommend a careful review of historical growth trends, available here.

What about dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. The TSR incorporates the value of any spin-offs or discounted capital increases, as well as any dividends, based on the assumption that dividends are reinvested. So for companies that pay a generous dividend, the TSR is often much higher than the stock price return. We note that for First International Bank of Israel, the TSR over the past 5 years was 171%, which is better than the stock price return mentioned above. The dividends paid by the company thus inflated the total return to shareholders.

A different perspective

We are pleased to report that First International Bank of Israel shareholders received a 50% one-year total shareholder return. And that includes the dividend. This gain is better than the five-year annual TSR, which is 22%. Therefore, it seems that the sentiment around the company has been positive lately. Given that the stock price momentum remains strong, it might be worth taking a closer look at the stock lest you miss an opportunity. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Consider the risks, for example. Every business has them, and we’ve spotted 1 warning sign for First International Bank of Israel you should know.

Sure First International Bank of Israel may not be the best stock to buy. So you might want to see this free collection of growth values.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on IL exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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