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When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Manhattan Bridge Capital, Inc. (NASDAQ:LOAN) which saw its share price drive 165% higher over five years. In the last week the share price is up 2.4%.
See our latest analysis for Manhattan Bridge Capital
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During five years of share price growth, Manhattan Bridge Capital achieved compound earnings per share (EPS) growth of 27% per year. This EPS growth is higher than the 21% average annual increase in the share price. So it seems the market isn’t so enthusiastic about the stock these days.
Dive deeper into Manhattan Bridge Capital’s key metrics by checking this interactive graph of Manhattan Bridge Capital’s earnings, revenue 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 return. 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. We note that for Manhattan Bridge Capital the TSR over the last 5 years was 287%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Manhattan Bridge Capital shareholders are down 4.2% for the year (even including dividends), but the market itself is up 5.7%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn’t be so upset, since they would have made 31%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. If you would like to research Manhattan Bridge Capital in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
Of course Manhattan Bridge Capital may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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