Yahoo Finance Did Changing Sentiment Drive Berkshire Hills Bancorp's (NYSE:BHLB) Share Price Down By 27%?
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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. For example, the Berkshire Hills Bancorp, Inc. (NYSE:BHLB) share price is down 27% in the last year. That's well bellow the market return of 10%. On the bright side, the stock is actually up 3.7% in the last three years. Unfortunately the share price momentum is still quite negative, with prices down 12% in thirty days.
View our latest analysis for Berkshire Hills Bancorp
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the unfortunate twelve months during which the Berkshire Hills Bancorp share price fell, it actually saw its earnings per share (EPS) improve by 63%. It could be that the share price was previously over-hyped. It's surprising to see the share price fall so much, despite the improved EPS. So it's easy to justify a look at some other metrics.
Berkshire Hills Bancorp managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So it makes a lot of sense to check out what analysts think Berkshire Hills Bancorp will earn in the future (free profit forecasts)
What about the Total Shareholder Return (TSR)?
We've already covered Berkshire Hills Bancorp's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Berkshire Hills Bancorp shareholders, and that cash payout explains why its total shareholder loss of 25%, over the last year, isn't as bad as the share price return.
A Different Perspective
While the broader market gained around 10% in the last year, Berkshire Hills Bancorp shareholders lost 25% (even including dividends). 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. On the bright side, long term shareholders have made money, with a gain of 4.3% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Berkshire Hills Bancorp by clicking this link.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
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 editorial-team@simplywallst.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.
