The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of Skellerup Holdings Limited (NZSE:SKL) stock is up an impressive 178% over the last five years.

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.

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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).

Over half a decade, Skellerup Holdings managed to grow its earnings per share at 12% a year. This EPS growth is lower than the 23% average annual increase in the share price. So it’s fair to assume the market has a higher opinion of the business than it did five years ago. That’s not necessarily surprising considering the five-year track record of earnings growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Skellerup Holdings, it has a TSR of 250% 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!

It’s good to see that Skellerup Holdings has rewarded shareholders with a total shareholder return of 21% in the last twelve months. Of course, that includes the dividend. However, the TSR over five years, coming in at 29% per year, is even more impressive. It’s always interesting to track share price performance over the longer term. But to understand Skellerup Holdings better, we need to consider many other factors. Even so, be aware that Skellerup Holdings is showing 1 warning sign in our investment analysis , you should know about…