Luceco plc (LON:LUCE) Shareholders might be concerned after the share price fell 13% in the last quarter. But that doesn’t change the fact that shareholders have received really good returns over the last five years. It’s fair to say that most would be happy with a 109% gain in that time. While it’s never nice to see a share price falling, it’s important to look at a longer time horizon. The more important question is whether the stock is too cheap or too expensive today. While returns have been good over the last five years, we feel sorry for shareholders who didn’t hold onto their shares for as long, as the share price is down 68% over the last three years.

Let’s take a look at the underlying fundamentals over the longer term and see if they are consistent with shareholder returns.

Check out our latest analysis for Luceco

To quote Buffett, “Ships will sail around the world, but the Flat Earth Society will flourish. There will continue to be huge discrepancies between price and value in the marketplace…” By comparing earnings per share (EPS) and share price changes over time, we can get a sense of how investor attitudes toward a company have changed over time.

Over half a decade, Luceco managed to grow its earnings per share by 63% annually. The EPS growth is more impressive than the 16% annual share price increase over the same period. Therefore, the market seems to have become relatively bearish on the company.

The company’s earnings per share (over time) is shown in the image below (click to see the exact numbers).

We think it is positive that insiders have made significant purchases over the past year. However, future earnings will be much more important to whether current shareholders make money. This free If you want to investigate the stock further, Luceco’s interactive earnings, revenue and cash flow report is a good place to start.

What about dividends?

When considering investment returns, the difference must be taken into account between Total return for shareholders (TSR) and Share price return. The TSR is a return calculation that takes into account the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It is fair to say that the TSR gives a more complete picture for dividend paying stocks. In fact, Luceco’s TSR over the last 5 years was 142%, which exceeds the share price return mentioned earlier. The dividends paid by the company have therefore in total shareholder return.

The story continues

A different perspective

We’re pleased to report that Luceco shareholders have received a total return of 25% over one year. This includes the dividend, of course. Given that the TSR for one year is better than the five-year TSR (the latter coming in at 19% per year), it seems that the stock’s performance has improved recently. At its best, this suggests real business momentum, meaning now could be a good time to dig deeper. While it’s worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, take risks – Luceco has 1 warning sign In our opinion, you should be aware of this.

Luceco is not the only stock that insiders are buying, so take a look at these free List of small-cap companies with attractive valuations that have been purchased by insiders.

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

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not 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 analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.