Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, the Far East Holdings Berhad (KLSE:FAREAST) share price is up 57% in the last 5 years, clearly besting the market return of around 9.3% (ignoring dividends). On the other hand, the more recent gains haven’t been so impressive, with shareholders gaining just 8.2%, including dividends.

So let’s assess the underlying fundamentals over the last 5 years and see if they’ve moved in lock-step with shareholder returns.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

Over half a decade, Far East Holdings Berhad managed to grow its earnings per share at 19% a year. This EPS growth is higher than the 9% average annual increase in the share price. So it seems the market isn’t so enthusiastic about the stock these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.24.

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

Dive deeper into Far East Holdings Berhad’s key metrics by checking this interactive graph of Far East Holdings Berhad’s earnings, revenue and cash flow.

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Far East Holdings Berhad the TSR over the last 5 years was 89%, 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!

We’re pleased to report that Far East Holdings Berhad shareholders have received a total shareholder return of 8.2% over one year. And that does include the dividend. However, the TSR over five years, coming in at 14% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. 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. Consider risks, for instance. Every company has them, and we’ve spotted 1 warning sign for Far East Holdings Berhad you should know about.