For many, the main point of investing is to generate higher returns than the overall market. But every investor is virtually certain to have both over-performing and under-performing stocks. So we wouldn’t blame long term StarHub Ltd (SGX:CC3) shareholders for doubting their decision to hold, with the stock down 14% over a half decade.

So let’s have a look 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.

Looking back five years, both StarHub’s share price and EPS declined; the latter at a rate of 3.0% per year. This change in EPS is remarkably close to the 3% average annual decrease in the share price. That suggests that the market sentiment around the company hasn’t changed much over that time. So it’s fair to say the share price has been responding to changes in EPS.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into StarHub’s key metrics by checking this interactive graph of StarHub’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 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. As it happens, StarHub’s TSR for the last 5 years was 9.3%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

While the broader market gained around 22% in the last year, StarHub shareholders lost 4.0% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn’t be so upset, since they would have made 1.8%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Even so, be aware that StarHub is showing 2 warning signs in our investment analysis , you should know about…