The 75% return delivered to Banco Latinoamericano de Comercio Exterior S. A's (NYSE:BLX) shareholders actually lagged YoY earnings growth

If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can significantly boost your returns by picking above-average stocks. To wit, the Banco Latinoamericano de Comercio Exterior, S. A. (NYSE:BLX) share price is 66% higher than it was a year ago, much better than the market return of around 19% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! And shareholders have also done well over the long term, with an increase of 63% in the last three years.

Since it's been a strong week for Banco Latinoamericano de Comercio Exterior S. A shareholders, let's have a look at trend of the longer term fundamentals.

View our latest analysis for Banco Latinoamericano de Comercio Exterior S. A

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the last year Banco Latinoamericano de Comercio Exterior S. A grew its earnings per share (EPS) by 92%. It's fair to say that the share price gain of 66% did not keep pace with the EPS growth. So it seems like the market has cooled on Banco Latinoamericano de Comercio Exterior S. A, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 6.03.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Banco Latinoamericano de Comercio Exterior S. A's key metrics by checking this interactive graph of Banco Latinoamericano de Comercio Exterior S. A's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Banco Latinoamericano de Comercio Exterior S. A the TSR over the last 1 year was 75%, 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 Banco Latinoamericano de Comercio Exterior S. A shareholders have received a total shareholder return of 75% over one year. That's including the dividend. That gain is better than the annual TSR over five years, which is 8%. 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Banco Latinoamericano de Comercio Exterior S. A , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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