Despite the downward trend in earnings at Koninklijke KPN (AMS:KPN), the stock is up 3.2%, representing a three-year gain of 59%.

By purchasing an index fund, you can easily approximate the market return. However, if you buy good companies at attractive prices, your portfolio’s return could exceed the average market return. Just take a look Koninklijke KPN NV (AMS:KPN), which gained 39% over three years, significantly outpacing the market decline of 5.9% (excluding dividends). However, recent returns haven’t been as impressive: the stock returned just 27% over the last year, including dividends.

Let’s examine how the company’s fundamentals have played a role in driving long-term shareholder returns with a solid 7-day performance.

Check out our latest analysis for Koninklijke KPN

While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment towards a company has changed is to compare the earnings per share (EPS) with the share price.

During the three years of share price growth, Koninklijke KPN actually saw its earnings per share (EPS) decline by 12% per year.

Therefore, we doubt that the market primarily looks at earnings per share (EPS) to assess the company’s value. Since the change in EPS doesn’t seem to correlate with the change in share price, it’s worth taking a look at other metrics.

Interestingly, the dividend has increased over time; So that may have given the share price a boost. Sometimes yield-focused investors flock to a company if they believe the dividend can grow over time.

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

We consider it positive that insiders have made significant purchases in the last year. Still, future profits will be far more important to whether current shareholders make money. Here you can see what analysts are predicting for Koninklijke KPN interactive Chart of future earnings estimates.

What about dividends?

It is important to consider the total shareholder return as well as the share price return for a particular stock. 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. Arguably, the TSR gives a more comprehensive picture of a stock’s return. In the case of Koninklijke KPN, the TSR over the last three years was 59%. This exceeds the share price return mentioned above. The dividends paid by the company have therefore led to an increase in total Shareholder return.

The story continues

A different perspective

We are pleased to report that Koninklijke KPN shareholders have received a total return of 27% in one year. And that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 11% per annum), the stock’s performance seems to have improved recently. At best, this could indicate real business momentum, meaning now would be a good time to delve deeper. I find it very interesting to look at the share price as an indicator of business development in the long term. But to gain real insight, we need to consider other information too. Case in point: We discovered it 2 warning signs for Koninklijke KPN You should be aware of that.

Koninklijke KPN isn’t the only stock that insiders are buying. For those who like to find lesser known companies The free A list of growing companies with recent insider purchases might be just the ticket.

Please note that the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Dutch exchanges.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term focused analysis based on fundamental data. Note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no positions in any stocks mentioned.