The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Sanford Limited (NZSE:SAN) share price is 46% higher than it was a year ago, much better than the market return of around 4.8% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Looking back further, the stock price is 32% higher than it was three years ago.

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 markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

During the last year Sanford grew its earnings per share (EPS) by 149%. It’s fair to say that the share price gain of 46% did not keep pace with the EPS growth. Therefore, it seems the market isn’t as excited about Sanford as it was before. This could be an opportunity.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Sanford has improved its bottom line over the last three years, but what does the future have in store? It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Sanford’s TSR for the last 1 year was 50%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

We’re pleased to report that Sanford shareholders have received a total shareholder return of 50% over one year. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 1.8% per year), it would seem that the stock’s performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before spending more time on Sanford it might be wise to click here to see if insiders have been buying or selling shares.