WisdomTree, Inc. (NYSE:WT) shareholders have seen the share price descend 10% over the month. But that doesn’t change the fact that shareholders have received really good returns over the last five years. We think most investors would be happy with the 131% return, over that period. We think it’s more important to dwell on the long term returns than the short term returns. Only time will tell if there is still too much optimism currently reflected in the share price.

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

Check out our latest analysis for WisdomTree

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

During five years of share price growth, WisdomTree achieved compound earnings per share (EPS) growth of 77% per year. This EPS growth is higher than the 18% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock.

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

It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, WisdomTree’s TSR for the last 5 years was 156%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

It’s good to see that WisdomTree has rewarded shareholders with a total shareholder return of 55% in the last twelve months. Of course, that includes the dividend. That’s better than the annualised return of 21% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 WisdomTree is showing 3 warning signs in our investment analysis , you should know about…