These days it’s easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the John Wiley & Sons, Inc. (NYSE:WLY) share price is 17% higher than it was a year ago, much better than the market return of around 10% (not including dividends) in the same period. That’s a solid performance by our standards! In contrast, the longer term returns are negative, since the share price is 11% lower 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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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 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 the last year John Wiley & Sons grew its earnings per share, moving from a loss to a profit.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.

John Wiley & Sons’ revenue actually dropped 12% over last year. So using a snapshot of key business metrics doesn’t give us a good picture of why the market is bidding up the stock.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We know that John Wiley & Sons has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling John Wiley & Sons stock, you should check out this free report showing analyst profit forecasts.

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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of John Wiley & Sons, it has a TSR of 21% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!