The three-year returns for Issta's (TLV:ISTA) shareholders have been , yet its earnings growth was even better

By buying an index fund, investors can approximate the average market return. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. Just take a look at Issta Ltd (TLV:ISTA), which is up 17%, over three years, soundly beating the market decline of 4.8% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 9.5% in the last year.

Since it's been a strong week for Issta shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Issta

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.

Issta was able to grow its EPS at 21% per year over three years, sending the share price higher. This EPS growth is higher than the 5% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.36.

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

Dive deeper into Issta's key metrics by checking this interactive graph of Issta's earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We've already covered Issta's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Issta's TSR of 20% for the 3 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's good to see that Issta has rewarded shareholders with a total shareholder return of 9.5% in the last twelve months. That gain is better than the annual TSR over five years, which is 3%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Issta better, we need to consider many other factors. Even so, be aware that Issta is showing 4 warning signs in our investment analysis , and 1 of those is significant...

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.