Low-cost index funds make it easy to achieve average market returns. But across the board there are plenty of stocks that underperform the market. That’s what has happened with the JSE Limited (JSE:JSE) share price. It’s up 30% over three years, but that is below the market return. Looking at more recent returns, the stock is up 13% in a year.

Let’s take a look at the underlying fundamentals over the longer term, and see if they’ve been consistent with shareholders returns.

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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…’ 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.

During three years of share price growth, JSE achieved compound earnings per share growth of 6.6% per year. This EPS growth is lower than the 9% 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 three years ago. It is quite common to see investors become enamoured with a business, after a few years of solid progress.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that JSE has improved its bottom line lately, but is it going to grow revenue? Check if analysts think JSE will grow revenue in the future.

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 JSE, it has a TSR of 64% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

JSE shareholders gained a total return of 20% during the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 10% per year over five year. This suggests the company might be improving over time. It’s always interesting to track share price performance over the longer term. But to understand JSE better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we’ve spotted 1 warning sign for JSE you should know about.