The maximum you can lose on any stock (assuming you aren’t using leverage) is 100% of your money. But on the other hand, you can do a lot Following 100% if the business is doing well. For example, the The Charles Schwab company (NYSE: SCHW) The stock price has climbed 111% in the past three years. How nice of those who held the stock! The 18% gain over the past three months has also pleased shareholders.

With that in mind, it’s worth considering whether the underlying fundamentals of the business have been driving long-term performance, or if there are any gaps.

See our latest analysis for Charles Schwab

To quote Buffett, “Ships will sail around the world but the Flat Earth Society will thrive. There will continue to be wide spreads between price and value in the market … ‘One way to look at how market sentiment has changed over time is to look at the interaction between price. a company’s stock and earnings per share (EPS).

During the three years of share price growth, Charles Schwab achieved growth in compound earnings per share of 5.7% per year. This EPS growth is lower than the 28% average annual increase in the share price. This indicates that the market is feeling more optimistic about the stock, after the last few years of progress. It is not uncommon for the market to “re-evaluate” a stock after a few years of growth.

You can see how EPS has changed over time in the image below (click on the graph to see the exact values).

We love that insiders have bought stocks in the past twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide for the business. It might be worth taking a look at our free Charles Schwab Profit, Revenue and Cash Flow report.

What about dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. While the share price return reflects only the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital increase or spin-off. updated. Arguably, the TSR gives a more complete picture of the return generated by a stock. As it turns out, Charles Schwab’s TSR for the past 3 years was 121%, which exceeds the share price return mentioned earlier. This is largely the result of his dividend payments!

A different perspective

We are pleased to report that Charles Schwab shareholders received a total shareholder return of 58% over one year. This includes the dividend. As the 1-year TSR is better than the 5-year TSR (the latter standing at 16% per year), it seems that the performance of the stock has improved in recent times. Someone with a bullish outlook might take the recent improvement in TSR as indicating that the business itself is improving over time. I find it very interesting to look at the stock price over the long term as an indicator of company performance. But to really understand better, we have to take other information into account as well. Consider, for example, the ever-present specter of investment risk. We have identified 1 warning sign with Charles Schwab and understanding them should be part of your investment process.

Charles Schwab is not the only one to buy. So take a look at this free list of growing companies with insider buying.

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

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.