Investing in Hellenic Telecommunications Organization (ATH:HTO) a year ago would have delivered you a 23% gain

There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But not every stock you buy will perform as well as the overall market. For example, the Hellenic Telecommunications Organization S.A. (ATH:HTO), share price is up over the last year, but its gain of 17% trails the market return. Having said that, the longer term returns aren't so impressive, with stock gaining just 3.9% in three years.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Hellenic Telecommunications Organization

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year Hellenic Telecommunications Organization grew its earnings per share (EPS) by 41%. It's fair to say that the share price gain of 17% did not keep pace with the EPS growth. So it seems like the market has cooled on Hellenic Telecommunications Organization, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.93.

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

It is of course excellent to see how Hellenic Telecommunications Organization has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Hellenic Telecommunications Organization the TSR over the last 1 year was 23%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Hellenic Telecommunications Organization shareholders have received returns of 23% over twelve months (even including dividends), which isn't far from the general market return. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 8%. It is possible that management foresight will bring growth well into the future, even if the share price slows down. It's always interesting to track share price performance over the longer term. But to understand Hellenic Telecommunications Organization better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Hellenic Telecommunications Organization .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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