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. Just take a look at Cembra Money Bank AG (VTX:CMBN), which is up 45%, over three years, soundly beating the market return of 13% (not including dividends). On the other hand, the returns haven’t been quite so good recently, with shareholders up just 36%, including dividends.

So let’s assess the underlying fundamentals over the last 3 years and see if they’ve moved in lock-step with shareholder returns.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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, Cembra Money Bank achieved compound earnings per share growth of 1.9% per year. This EPS growth is lower than the 13% average annual increase in the share price. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. It’s not unusual to see the market ‘re-rate’ a stock, after a few years of growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Cembra Money Bank’s key metrics by checking this interactive graph of Cembra Money Bank’s earnings, revenue and cash flow.

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. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Cembra Money Bank, it has a TSR of 69% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

We’re pleased to report that Cembra Money Bank shareholders have received a total shareholder return of 36% over one year. And that does include the dividend. That gain is better than the annual TSR over five years, which is 5%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Importantly, we haven’t analysed Cembra Money Bank’s dividend history. This free visual report on its dividends is a must-read if you’re thinking of buying.