Those who invested in First International Bank of Israel (TLV:FIBI) five years ago are up 188%

The maximum you can lose on any stock (assuming you are not using leverage) is 100% of your money. But on the positive side, if you buy shares of a high quality company at the right price, you can earn well over 100%. For example, the price of First International Bank of Israel Ltd (TLV:FIBI) The stock is up 133% over the past five years. Last week, the stock price was down about 1.7%.

So let’s examine and see if the long-term performance of the business has been consistent with the progress of the underlying business.

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 reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.

In five years of share price growth, First International Bank of Israel has achieved compound earnings per share (EPS) growth of 22% per year. Thus, the EPS growth rate is quite close to the annualized stock price gain of 18% per year. This indicates that investor sentiment towards the company has not changed much. On the contrary, the share price roughly followed EPS growth.

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 April 16, 2022

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. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. It can be said that the TSR gives a more complete picture of the return generated by a stock. We note that for First International Bank of Israel, the TSR over the past 5 years was 188%, which is better than the stock price return mentioned above. And there’s no price guessing that dividend payouts largely explain the divergence!

A different perspective

It’s nice to see that First International Bank of Israel shareholders have received a total shareholder return of 50% over the past year. This includes the dividend. As the one-year TSR is better than the five-year TSR (the latter standing at 24% per year), it seems that the stock’s performance has improved lately. At best, this may hint at genuine trading momentum, implying that now could be a great time to dig deeper. 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.

For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.

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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