Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. For example, the Centaur Media Plc (LON:CAU) share price is up 51% in the last 1 year, clearly besting the market return of around 20% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Zooming out, the stock is actually down 14% 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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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 Centaur Media saw its earnings per share (EPS) drop below zero. While this may prove temporary, we’d consider it a negative, so we would not have expected to see the share price up. It may be that the company has done well on other metrics.

Absent any improvement, we don’t think a thirst for dividends is pushing up the Centaur Media’s share price. Rather, we’d posit that the revenue increase of 9.2% might be more meaningful. Revenue growth often does precede earnings growth, so some investors might be willing to forgo profits today because they have their eyes fixed firmly on the future.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Centaur Media’s balance sheet strength is a great place to start, if you want to investigate the stock further.

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Centaur Media the TSR over the last 1 year was 60%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!