The total return for World Acceptance (NASDAQ:WRLD) investors has risen faster than earnings growth over the last three years

It hasn't been the best quarter for World Acceptance Corporation (NASDAQ:WRLD) shareholders, since the share price has fallen 17% in that time. But that doesn't undermine the rather lovely longer-term return, if you measure over the last three years. In three years the stock price has launched 104% higher: a great result. After a run like that some may not be surprised to see prices moderate. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.

Since the long term performance has been good but there's been a recent pullback of 7.1%, let's check if the fundamentals match the share price.

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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.

World Acceptance was able to grow its EPS at 62% per year over three years, sending the share price higher. This EPS growth is higher than the 27% average annual increase in the share price. So it seems investors have become more cautious about the company, over time.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how World Acceptance has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling World Acceptance stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that World Acceptance has rewarded shareholders with a total shareholder return of 18% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 5% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand World Acceptance better, we need to consider many other factors. For example, we've discovered 3 warning signs for World Acceptance (1 is a bit unpleasant!) that you should be aware of before investing here.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.