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Citizens Financial Group (NYSE: CFG) stock outperforms underlying earnings growth over the past five years

The main goal of investing for the long term is to make money. But more than that, you probably want to see it rise more than the market average. Corn Citizens Financial Group, Inc. (NYSE: CFG) failed to meet this second target, with the share price rising 91% over five years, which is below market performance. However, newer buyers should be happy with the 73% increase from last year.

After a solid gain last week, it’s worth seeing if long-term returns have been boosted by improving fundamentals.

To paraphrase Benjamin Graham: In the short term the market is a voting machine, but in the long term it is a weighing machine. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).

Over the five years of stock price growth, Citizens Financial Group has achieved compound earnings per share (EPS) growth of 22% per year. This EPS growth is greater than the average annual increase of 14% in the share price. So it looks like the market isn’t that keen on the stock these days. The reasonably low P / E ratio of 10.05 also suggests some apprehension in the market.

You can see how EPS has changed over time in the image below (click on the graph to see the exact values).

NYSE: CFG Earnings Per Share Growth October 23, 2021

We know that Citizens Financial Group has improved its results lately, but will it increase its revenues? If you are interested, you can check this free report showing consensus revenue forecast.

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 discounted demerger or capital increase, as well as any dividend, based on the assumption that dividends are reinvested. Arguably, the TSR gives a more complete picture of the return generated by a stock. We note that for Citizens Financial Group, the TSR over the past 5 years was 126%, which is better than the share price return mentioned above. The dividends paid by the company thus boosted the total shareholder return.

A different perspective

We are pleased to report that Citizens Financial Group shareholders have achieved an 80% year-on-year total shareholder return. Of course, this includes the dividend. This gain is better than the annual TSR over five years, which is 18%. Therefore, it seems that sentiment around the company has been positive lately. Since the stock price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at the long-term share price as an indicator of company performance. But to really get an overview, we have to take other information into account as well. For example, we have identified 2 warning signs for Citizens Financial Group (1 is significant) that you need to know.

We will like Citizens Financial Group better if we see large insider buys. In the meantime, watch this free list of growing companies with significant and recent insider buying.

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

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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