It's possible to achieve returns close to the market-weighted average return by buying an index fund. But even in a market-beating portfolio, some stocks will lag the market. While the Sime Darby Berhad (KLSE:SIME) share price is down 16% over half a decade, the total return to shareholders (which includes dividends) was 6.4%. And that total return actually beats the market decline of 0.8%.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for Sime Darby Berhad

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

During the unfortunate half decade during which the share price slipped, Sime Darby Berhad actually saw its earnings per share (EPS) improve by 22% per year. So it doesn't seem like EPS is a great guide to understanding how the market is valuing the stock. Or possibly, the market was previously very optimistic, so the stock has disappointed, despite improving EPS.

It is unusual to see such modest share price growth in the face of sustained EPS improvements. We can look to other metrics to try to understand the situation better.

We note that the dividend has fallen in the last five years, so that may have contributed to the share price decline.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Sime Darby Berhad is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Sime Darby Berhad the TSR over the last 5 years was 6.4%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.