Expeditors International of Washington's (NASDAQ:EXPD) five-year total shareholder returns outpace the underlying earnings growth

Expeditors International of Washington, Inc. (NASDAQ:EXPD) shareholders might be concerned after seeing the share price drop 16% in the last month. On the bright side the returns have been quite good over the last half decade. It has returned a market beating 76% in that time. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 21% drop, in the last year.

Since the long term performance has been good but there's been a recent pullback of 4.8%, let's check if the fundamentals match the share price.

View our latest analysis for Expeditors International of Washington

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.

Over half a decade, Expeditors International of Washington managed to grow its earnings per share at 30% a year. This EPS growth is higher than the 12% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.96.

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

We know that Expeditors International of Washington has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Expeditors International of Washington stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. We note that for Expeditors International of Washington the TSR over the last 5 years was 87%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Expeditors International of Washington shareholders are down 20% over twelve months (even including dividends), which isn't far from the market return of -21%. Longer term investors wouldn't be so upset, since they would have made 13%, each year, over five years. If the fundamental data remains strong, and the share price is simply down on sentiment, then this could be an opportunity worth investigating. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Expeditors International of Washington , and understanding them should be part of your investment process.

We will like Expeditors International of Washington better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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