Those who invested in Primis Financial (NASDAQ: FRST) a year ago are up 65%

The easiest way to invest in stocks is to buy exchange traded funds. But you can do better than that by choosing better-than-average stocks (as part of a diversified portfolio). Namely, the Primis Financial Corp. The stock price (NASDAQ: FRST) is 61% higher than a year ago, far better than the market return of around 32% (excluding dividends) over the same time period. It’s a solid performance by our standards! Long-term returns have not been so good, with the share price only 3.8% higher than it was three years ago.

With that in mind, it’s worth seeing if the underlying fundamentals of the business have been driving long-term performance, or if there are any gaps.

To paraphrase Benjamin Graham: In the short term the market is a voting machine, but in the long term it is a weighing machine. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).

Primis Financial has been able to increase its EPS by 66% over the past twelve months. Note that the growth in earnings per share is not far from the growth in the share price (61%). This makes us think that the market hasn’t really changed its sentiment towards the company over the past year. We don’t think it’s a coincidence that the stock price is rising at a rate similar to earnings per share.

The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).

NasdaqGM: FRST Growth in earnings per share November 6, 2021

It’s probably worth noting that we saw some significant insider buying in the last quarter, which we see as positive. That said, we believe earnings and revenue growth trends are even more important factors to consider. Dive Deeper into Profits by Viewing this Interactive Graph from Primis Financial profit, revenue and cash flow.

What about dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any discounted demerger or capital increase, as well as any dividend, based on the assumption that dividends are reinvested. So, for companies that pay a generous dividend, the TSR is often much higher than the return on the share price. We note that for Primis Financial, the TSR over the past year was 65%, which is better than the share price return mentioned above. And there’s no price guessing that dividend payments are a big reason for the discrepancy!

A different perspective

It is good to see that Primis Financial has rewarded its shareholders with a total shareholder return of 65% over the past twelve months. Of course, this includes the dividend. This is better than the 6% annualized return over half a decade, which implies that the company has been doing better recently. Since the stock price momentum remains strong, it might be worth taking a closer look at the stock lest you miss an opportunity. It is always interesting to follow the evolution of stock prices over the long term. But to understand Primis Financial better, there are many other factors to consider. To this end, you should inquire about the 2 warning signs we spotted with Primis Financial (including 1 which should not be ignored) .

Primis Financial isn’t the only stock that insiders buy. For those who like to find winning investments this free list of growing companies with recent insider buys, might be just the ticket.

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

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

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