Investors in Promotora y Operadora de Infraestructura S. A. B. de C. V (BMV:PINFRA) have seen returns of 23% over the past three years

Thanks in no small measure to Vanguard founder Jack Bogle, it's easy buy a low cost index fund, which should provide the average market return. But if you pick the right individual stocks, you could make more than that. Notably, the Promotora y Operadora de Infraestructura, S. A. B. de C. V. (BMV:PINFRA) share price has gained 10% in three years, which is better than the average market return. The stock price is up 0.9%: that's not amazing, but it's better than a kick in the teeth.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

See our latest analysis for Promotora y Operadora de Infraestructura S. A. B. de C. V

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 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 three years of share price growth, Promotora y Operadora de Infraestructura S. A. B. de C. V achieved compound earnings per share growth of 36% per year. The average annual share price increase of 3% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time. We'd venture the lowish P/E ratio of 11.17 also reflects the negative sentiment around the stock.

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

We know that Promotora y Operadora de Infraestructura S. A. B. de C. V has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Promotora y Operadora de Infraestructura S. A. B. de C. V's financial health with this free report on its balance sheet.

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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Promotora y Operadora de Infraestructura S. A. B. de C. V's TSR for the last 3 years was 23%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

We're pleased to report that Promotora y Operadora de Infraestructura S. A. B. de C. V shareholders have received a total shareholder return of 2.5% over one year. That's including the dividend. That gain is better than the annual TSR over five years, which is 1.4%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Promotora y Operadora de Infraestructura S. A. B. de C. V has 2 warning signs we think you should be aware of.

We will like Promotora y Operadora de Infraestructura S. A. B. de C. V better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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

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