The Tatton Asset Management (LON:TAM) Share Price Is Up 28% And Shareholders Are Holding On

One simple way to benefit from the stock market is to buy an index fund. But if you choose individual stocks with prowess, you can make superior returns. For example, Tatton Asset Management plc (LON:TAM) shareholders have seen the share price rise 28% over three years, well in excess of the market decline (6.0%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 12% , including dividends .

View our latest analysis for Tatton Asset Management

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

During three years of share price growth, Tatton Asset Management moved from a loss to profitability. So we would expect a higher share price over the period.

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

It is of course excellent to see how Tatton Asset Management has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Tatton Asset Management stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Tatton Asset Management's TSR for the last 3 years was 42%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Tatton Asset Management rewarded shareholders with a total shareholder return of 12% over the last year. That includes the value of the dividend. The TSR has been even better over three years, coming in at 12% per year. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 2 warning signs for Tatton Asset Management that you should be aware of before investing here.

But note: Tatton Asset Management may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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This article by Simply Wall St is general in nature. 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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