When we invest, we're generally looking for stocks that outperform the market average. Buying under-rated businesses is one path to excess returns. For example, the Halyk Bank of Kazakhstan Joint Stock Company (LON:HSBK) share price is up 35% in the last 5 years, clearly besting the market return of around 5.9% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 50% in the last year , including dividends .

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

View our latest analysis for Halyk Bank of Kazakhstan

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Halyk Bank of Kazakhstan achieved compound earnings per share (EPS) growth of 30% per year. This EPS growth is higher than the 6% 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 2.56.

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

We know that Halyk Bank of Kazakhstan 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 Halyk Bank of Kazakhstan stock, you should check out this FREE detailed 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. 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 Halyk Bank of Kazakhstan the TSR over the last 5 years was 156%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that Halyk Bank of Kazakhstan has rewarded shareholders with a total shareholder return of 50% in the last twelve months. Of course, that includes the dividend. That's better than the annualised return of 21% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 1 warning sign with Halyk Bank of Kazakhstan , and understanding them should be part of your investment process.