Isras Investment's (TLV:ISRS) one-year earnings growth trails the shareholder returns

There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But if you choose that path, you're going to buy some stocks that fall short of the market. Over the last year the Isras Investment Company Ltd (TLV:ISRS) share price is up 19%, but that's less than the broader market return. The longer term returns have not been as good, with the stock price only 9.9% higher than it was three years ago.

The past week has proven to be lucrative for Isras Investment investors, so let's see if fundamentals drove the company's one-year performance.

See our latest analysis for Isras Investment

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).

During the last year Isras Investment grew its earnings per share (EPS) by 18%. The similarity between the EPS growth and the 19% share price gain really stands out. So this implies that investor expectations of the company have remained pretty steady. It makes intuitive sense that the share price and EPS would grow at similar rates.

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

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

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. As it happens, Isras Investment's TSR for the last 1 year was 27%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Isras Investment provided a TSR of 27% over the last twelve months. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it's actually better than the average return of 5% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Isras Investment you should be aware of, and 1 of them doesn't sit too well with us.

But note: Isras Investment 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 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.