Yahoo Finance Investors in Manhattan Bridge Capital (NASDAQ:LOAN) have seen returns of 0.7% over the past three years
While it may not be enough for some shareholders, we think it is good to see the Manhattan Bridge Capital, Inc. (NASDAQ:LOAN) share price up 10% in a single quarter. But that doesn't help the fact that the three year return is less impressive. Truth be told the share price declined 22% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
View our latest analysis for Manhattan Bridge Capital
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the unfortunate three years of share price decline, Manhattan Bridge Capital actually saw its earnings per share (EPS) improve by 3.5% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.
After considering the numbers, we'd posit that the the market had higher expectations of EPS growth, three years back. However, taking a look at other business metrics might shed a bit more light on the share price action.
We note that the dividend seems healthy enough, so that probably doesn't explain the share price drop. It's good to see that Manhattan Bridge Capital has increased its revenue over the last three years. If the company can keep growing revenue, there may be an opportunity for investors. You might have to dig deeper to understand the recent share price weakness.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We know that Manhattan Bridge Capital has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Manhattan Bridge Capital will earn in the future (free profit forecasts).
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 spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Manhattan Bridge Capital, it has a TSR of 0.7% for the last 3 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
Manhattan Bridge Capital's TSR for the year was broadly in line with the market average, at 25%. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 6%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. 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 Manhattan Bridge Capital is showing 4 warning signs in our investment analysis , and 3 of those make us uncomfortable...
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 American 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.