Investors can buy low cost index fund if they want to receive the average market return. But in any diversified portfolio of stocks, you’ll see some that fall short of the average. Unfortunately for shareholders, while the SIIC Environment Holdings Ltd. (SGX:BHK) share price is up 14% in the last three years, that falls short of the market return. Zooming in, the stock is up a respectable 10% in the last year.

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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To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over the last three years, SIIC Environment Holdings failed to grow earnings per share, which fell 5.3% (annualized).

The strong decline in earnings per share suggests the market isn’t using EPS to judge the company. So we’ll need to take a look at some different metrics to try to understand why the share price remains solid.

We doubt the dividend payments explain the share price rise, since we don’t see any improvement in that regard. It could be that the revenue decline of 4.9% per year is viewed as evidence that SIIC Environment Holdings is shrinking. And to be fair, we don’t see how EPS can grow sustainably without a boost to revenue.

The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on SIIC Environment Holdings’ 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for SIIC Environment Holdings the TSR over the last 3 years was 37%, which is better than the share price return mentioned above. And there’s no prize for guessing that the dividend payments largely explain the divergence!