Inversiones La Construcción (SNSE:ILC) jumps 10% this week, though earnings growth is still tracking behind one-year shareholder returns

Unless you borrow money to invest, the potential losses are limited. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Inversiones La Construcción S.A. (SNSE:ILC) share price has soared 126% return in just a single year. Also pleasing for shareholders was the 45% gain in the last three months. And shareholders have also done well over the long term, with an increase of 53% in the last three years.

Since the stock has added CL$76b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for Inversiones La Construcción

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).

Inversiones La Construcción was able to grow EPS by 81% in the last twelve months. The share price gain of 126% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.

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

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

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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Inversiones La Construcción's TSR for the last 1 year was 152%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Inversiones La Construcción shareholders have received a total shareholder return of 152% over the last year. Of course, that includes the dividend. That certainly beats the loss of about 0.5% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Inversiones La Construcción better, we need to consider many other factors. Even so, be aware that Inversiones La Construcción is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

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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 Chilean 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.