It might be of some concern to shareholders to see the eBay Inc. (NASDAQ:EBAY) share price down 17% in the last month. In contrast the stock has done reasonably well over three years. In fact the stock is up 82%, which is better than the market return of 75%.

Now it’s worth having a look at the company’s fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

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While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

eBay became profitable within the last three years. That would generally be considered a positive, so we’d expect the share price to be up.

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

We know that eBay has improved its bottom line over the last three years, but what does the future have in store? You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of eBay, it has a TSR of 94% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

It’s nice to see that eBay shareholders have received a total shareholder return of 26% over the last year. That’s including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 12% per year), it would seem that the stock’s performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Even so, be aware that eBay is showing 1 warning sign in our investment analysis , you should know about…