IG Port's (TSE:3791) three-year total shareholder returns outpace the underlying earnings growth

It hasn't been the best quarter for IG Port, Inc. (TSE:3791) shareholders, since the share price has fallen 19% in that time. But that doesn't displace its brilliant performance over three years. Indeed, the share price is up a whopping 647% in that time. So you might argue that the recent reduction in the share price is unremarkable in light of the longer term performance. The thing to consider is whether there is still too much elation around the company's prospects. We love happy stories like this one. The company should be really proud of that performance!

While this past week has detracted from the company's three-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

Check out our latest analysis for IG Port

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 three years of share price growth, IG Port achieved compound earnings per share growth of 46% per year. This EPS growth is lower than the 96% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It's not unusual to see the market 're-rate' a stock, after a few years of growth.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It is of course excellent to see how IG Port has grown profits over the years, but the future is more important for shareholders. This free interactive report on IG Port's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for IG Port the TSR over the last 3 years was 671%, 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

We're pleased to report that IG Port shareholders have received a total shareholder return of 45% over one year. Of course, that includes the dividend. However, the TSR over five years, coming in at 47% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand IG Port better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with IG Port (including 1 which doesn't sit too well with us) .

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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