Many investors define successful investing as beating the market average over the long term. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that’s been the case for longer term Chicago Atlantic Real Estate Finance, Inc. (NASDAQ:REFI) shareholders, since the share price is down 11% in the last three years, falling well short of the market return of around 67%.

It’s worthwhile assessing if the company’s economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let’s do just that.

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While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

Chicago Atlantic Real Estate Finance saw its EPS decline at a compound rate of 2.4% per year, over the last three years. The share price decline of 4% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 7.76.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

NasdaqGM:REFI Earnings Per Share Growth June 11th 2025

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

Portfolio Valuation calculation on simply wall st

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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Chicago Atlantic Real Estate Finance the TSR over the last 3 years was 34%, 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

Chicago Atlantic Real Estate Finance produced a TSR of 3.4% over the last year. While you don’t go broke making a profit, this return was actually lower than the average market return of about 14%. At least the longer term returns (running at about 10% a year, are better. Even the best companies don’t see strong share price performance every year. It’s always interesting to track share price performance over the longer term. But to understand Chicago Atlantic Real Estate Finance better, we need to consider many other factors. For example, we’ve discovered 1 warning sign for Chicago Atlantic Real Estate Finance that you should be aware of before investing here.