By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. Just take a look at Fairchem Speciality Limited (NSE:FAIRCHEM), which is up 91%, over three years, soundly beating the market return of 38% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 41% in the last year, including dividends.

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See our latest analysis for Fairchem Speciality

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Fairchem Speciality was able to grow its EPS at 46% per year over three years, sending the share price higher. The average annual share price increase of 24% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock.

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

We know that Fairchem Speciality has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Fairchem Speciality's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given 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 the return generated by a stock. As it happens, Fairchem Speciality's TSR for the last 3 years was 94%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that Fairchem Speciality shareholders have gained 41% (in total) over the last year. And yes, that does include the dividend. So this year's TSR was actually better than the three-year TSR (annualized) of 25%. Given the track record of solid returns over varying time frames, it might be worth putting Fairchem Speciality on your watchlist. If you would like to research Fairchem Speciality in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.