As an investor its worth striving to ensure your overall portfolio beats the market average. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that’s been the case for longer term Jersey Electricity plc (LON:JEL) shareholders, since the share price is down 15% in the last three years, falling well short of the market return of around 20%.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they’ve been consistent with returns.

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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.

Jersey Electricity saw its EPS decline at a compound rate of 10% per year, over the last three years. In comparison the 5% compound annual share price decline isn’t as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

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

Dive deeper into Jersey Electricity’s key metrics by checking this interactive graph of Jersey Electricity’s earnings, revenue and cash flow.

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. We note that for Jersey Electricity the TSR over the last 3 years was -4.8%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

Jersey Electricity provided a TSR of 1.4% over the last twelve months. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 3% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. 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. Consider risks, for instance. Every company has them, and we’ve spotted 1 warning sign for Jersey Electricity you should know about.