When we invest, we’re generally looking for stocks that outperform the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, long term Swiss Life Holding AG (VTX:SLHN) shareholders have enjoyed a 43% share price rise over the last half decade, well in excess of the market return of around 5.8% (not including dividends). However, more recent returns haven’t been as impressive as that, with the stock returning just 27% in the last year, including dividends.

With that in mind, it’s worth seeing if the company’s underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

See our latest analysis for Swiss Life Holding

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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 five years of share price growth, Swiss Life Holding achieved compound earnings per share (EPS) growth of 2.8% per year. This EPS growth is lower than the 7% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. And that’s hardly shocking given the track record of growth.

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

This free interactive report on Swiss Life Holding’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

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. In the case of Swiss Life Holding, it has a TSR of 84% for the last 5 years. That exceeds its share price return that we previously mentioned. And there’s no prize for guessing that the dividend payments largely explain the divergence!

We’re pleased to report that Swiss Life Holding shareholders have received a total shareholder return of 27% 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 13% 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. Importantly, we haven’t analysed Swiss Life Holding’s dividend history. This free visual report on its dividends is a must-read if you’re thinking of buying.