NewMed Energy - Limited Partnership's (TLV:NWMD) investors will be pleased with their solid 147% return over the last three years

One simple way to benefit from the stock market is to buy an index fund. But if you pick the right individual stocks, you could make more than that. For example, NewMed Energy - Limited Partnership (TLV:NWMD) shareholders have seen the share price rise 93% over three years, well in excess of the market decline (0.6%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 34%, including dividends.

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.

View our latest analysis for NewMed Energy - Limited Partnership

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

NewMed Energy - Limited Partnership was able to grow its EPS at 16% per year over three years, sending the share price higher. In comparison, the 24% per year gain in the share price outpaces the EPS growth. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. It is quite common to see investors become enamoured with a business, after a few years of solid progress.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into NewMed Energy - Limited Partnership's key metrics by checking this interactive graph of NewMed Energy - Limited Partnership's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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 NewMed Energy - Limited Partnership the TSR over the last 3 years was 147%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

NewMed Energy - Limited Partnership shareholders have received returns of 34% 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 15%. 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 NewMed Energy - Limited Partnership better, we need to consider many other factors. For example, we've discovered 2 warning signs for NewMed Energy - Limited Partnership that you should be aware of before investing here.

Of course NewMed Energy - Limited Partnership may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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