Home youth program budget Manhattan Bridge Capital (NASDAQ:LOAN) investors have returned 6.3% over the past three years

Manhattan Bridge Capital (NASDAQ:LOAN) investors have returned 6.3% over the past three years

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Many investors define a successful investment as beating the market average over the long term. But the risk of stock picking is that you are likely to buy underperforming companies. We regret to report that in the long run Manhattan Bridge Capital, Inc. (NASDAQ:LOAN) shareholders have had this experience, with the stock price falling 17% in three years, against a market return of about 26%. Unfortunately, the stock market dynamic is still quite negative, with prices down 9.4% in thirty days. We note, however, that the broader market fell 9.2% during this period, which may have weighed on the stock price.

Given that shareholders are down longer term, let’s take a look at the underlying fundamentals over this period and see if they have been consistent with returns.

In his test The Graham-and-Doddsville super-investors Warren Buffett has described how stock prices don’t always rationally reflect a company’s value. An imperfect but simple way to examine the evolution of a company’s perception by the market is to compare the evolution of earnings per share (EPS) with the evolution of the share price.

During the three years of declining stock prices, Manhattan Bridge Capital’s earnings per share (EPS) fell 2.2% each year. This reduction in EPS is slower than the 6% annual reduction in share price. It is therefore likely that the drop in EPS disappointed the market, leaving investors hesitant to buy.

The image below shows how EPS has tracked over time (if you click on the image you can see more details).

NasdaqCM: READY Earnings Per Share Growth October 17, 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. Dive deeper into earnings with this interactive chart from Manhattan Bridge Capital profit, turnover and cash flow.

What about dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. While the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital raising or spin-offs. off updated. So for companies that pay a generous dividend, the TSR is often much higher than the stock price return. It turns out that Manhattan Bridge Capital’s TSR for the past 3 years was 6.3%, which exceeds the stock price return mentioned earlier. This is largely the result of its dividend payments!

A different perspective

While it was certainly disappointing to see that Manhattan Bridge Capital shares lost 7.1% throughout the year, it wasn’t nearly as bad as the market’s 25% loss. Of course, the long-term returns are much more important, and the good news is that over five years, the stock has returned 6% for each year. The company may only face short-term problems, but shareholders should keep a close eye on the fundamentals. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take risks, for example – Manhattan Bridge Capital has 3 warning signs (and 1 which is significant) we think 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 US 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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.