Auckland International Airport Limited (NZSE:AIA) shareholders might be concerned after seeing the share price drop 12% in the last quarter. Looking further back, the stock has generated good profits over five years. It has returned a market beating 33% in that time.

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.

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While Auckland International Airport made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

For the last half decade, Auckland International Airport can boast revenue growth at a rate of 16% per year. That’s well above most pre-profit companies. While the compound gain of 6% per year is good, it’s not unreasonable given the strong revenue growth. If the strong revenue growth continues, we’d hope to see the share price to follow, in time. Of course, you’ll have to research the business more fully to figure out if this is an attractive opportunity.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Auckland International Airport the TSR over the last 5 years was 38%, 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!

Auckland International Airport shareholders are up 1.1% for the year (even including dividends). But that was short of the market average. It’s probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 7% over five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. 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. Even so, be aware that Auckland International Airport is showing 1 warning sign in our investment analysis , you should know about…