Investing in Richmond Mutual Bancorporation (NASDAQ:RMBI) three years ago would have delivered you a 21% gain

Low-cost index funds make it easy to achieve average market returns. But across the board there are plenty of stocks that underperform the market. That’s what has happened with the Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI) share price. It’s up 11% over three years, but that is below the market return. Unfortunately, the share price has fallen 8.6% over twelve months.

Now it’s worth having a look at the company’s fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

Check out our latest analysis for Richmond Mutual Bancorporation

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

earnings-per-share-growth

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Richmond Mutual Bancorporation the TSR over the last 3 years was 21%, which is better than the share price return mentioned above. And there’s no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While it’s never nice to take a loss, Richmond Mutual Bancorporation shareholders can take comfort that , including dividends, their trailing twelve month loss of 6.6% wasn’t as bad as the market loss of around -10%. Shareholders who have held for three years might be relatively sanguine about the recent weakness, given they have made 6% per year for three years. Given the three year returns are better than the return over the last year, it might be that the broader market has weighed on the stock recently. It’s always interesting to track share price performance over the longer term. But to understand Richmond Mutual Bancorporation better, we need to consider many other factors. Take risks, for example – Richmond Mutual Bancorporation has 1 warning sign we think you should be aware of.

Richmond Mutual Bancorporation is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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