Investing in Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság (BUSE:MTELEKOM) three years ago would have delivered you a 539% gain

For us, stock picking is in large part the hunt for the truly magnificent stocks. But when you hold the right stock for the right time period, the rewards can be truly huge. Take, for example, the Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság (BUSE:MTELEKOM) share price, which skyrocketed 433% over three years. Meanwhile the share price is 1.5% higher than it was a week ago.

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.

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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.

Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság was able to grow its EPS at 51% per year over three years, sending the share price higher. This EPS growth is lower than the 75% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did three years ago. That's not necessarily surprising considering the three-year track record of earnings growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság's financial health with this free report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság, it has a TSR of 539% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság shareholders have received a total shareholder return of 46% over the last year. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 44% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság you should know about.

Of course Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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