Recent 11% pullback isn't enough to hurt long-term Saunders International (ASX:SND) shareholders, they're still up 58% over 5 years

Saunders International Limited (ASX:SND) shareholders might be concerned after seeing the share price drop 11% in the last week. But the silver lining is the stock is up over five years. In that time, it is up 32%, which isn't bad, but is below the market return of 76%.

In light of the stock dropping 11% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 the five years of share price growth, Saunders International moved from a loss to profitability. That would generally be considered a positive, so we'd hope to see the share price to rise. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Saunders International share price is down 29% in the last three years. During the same period, EPS grew by 11% each year. It would appear there's a real mismatch between the increasing EPS and the share price, which has declined -11% a year for three years.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

This free interactive report on Saunders International's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Saunders International the TSR over the last 5 years was 58%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Investors in Saunders International had a tough year, with a total loss of 6.3% (including dividends), against a market gain of about 18%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 10% per year over half a decade. 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. It's always interesting to track share price performance over the longer term. But to understand Saunders International better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Saunders International (including 1 which is a bit concerning) .

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

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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.