The simplest way to invest in stocks is to buy exchange traded funds. But investors can boost returns by picking market-beating companies to own shares in. For example, the Warteck Invest AG (VTX:WARN) share price is up 20% in the last 1 year, clearly besting the market return of around 0.2% (not including dividends). So that should have shareholders smiling. Zooming out, the stock is actually down 8.6% in the last three years.

So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.

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In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 Warteck Invest grew its earnings per share (EPS) by 27%. This EPS growth is significantly higher than the 20% increase in the share price. Therefore, it seems the market isn’t as excited about Warteck Invest as it was before. This could be an opportunity.

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

We know that Warteck Invest has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Warteck Invest will grow revenue in the future.

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. As it happens, Warteck Invest’s TSR for the last 1 year was 24%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

We’re pleased to report that Warteck Invest shareholders have received a total shareholder return of 24% over one year. And that does include the dividend. That’s better than the annualised return of 3% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Like risks, for instance. Every company has them, and we’ve spotted 2 warning signs for Warteck Invest (of which 1 shouldn’t be ignored!) you should know about.