Promotora y Operadora de Infraestructura S. A. B. de C. V's (BMV:PINFRA) 8.3% CAGR outpaced the company's earnings growth over the same three-year period

By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Promotora y Operadora de Infraestructura, S. A. B. de C. V. (BMV:PINFRA) shareholders have seen the share price rise 17% over three years, well in excess of the market decline (3.9%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 4.9% in the last year.

Since it's been a strong week for Promotora y Operadora de Infraestructura S. A. B. de C. V shareholders, let's have a look at trend of the longer term fundamentals.

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

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

Promotora y Operadora de Infraestructura S. A. B. de C. V was able to grow its EPS at 27% per year over three years, sending the share price higher. The average annual share price increase of 6% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 9.81.

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

We know that Promotora y Operadora de Infraestructura S. A. B. de C. V has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Promotora y Operadora de Infraestructura S. A. B. de C. V, it has a TSR of 27% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

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 4.9% over one year. Of course, that includes the dividend. That's better than the annualised return of 0.9% over half a decade, implying that the company is doing better recently. 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. For example, we've discovered 1 warning sign for Promotora y Operadora de Infraestructura S. A. B. de C. V that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.