We believe investing is smart because history shows that stock markets go higher in the long term. But not every stock you buy will perform as well as the overall market. Unfortunately for shareholders, while the The Clorox Company (NYSE:CLX) share price is up 36% in the last year, that falls short of the market return. Unfortunately the longer term returns are not so good, with the stock falling 5.4% in the last three years.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

See our latest analysis for Clorox

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During the last year Clorox grew its earnings per share (EPS) by 87%. This EPS growth is significantly higher than the 36% increase in the share price. So it seems like the market has cooled on Clorox, despite the growth. Interesting. Having said that, the market is still optimistic, given the P/E ratio of 69.23.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Clorox has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Clorox the TSR over the last 1 year was 40%, 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

Clorox's TSR for the year was broadly in line with the market average, at 40%. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 4%. It is possible that management foresight will bring growth well into the future, even if the share price slows down. It's always interesting to track share price performance over the longer term. But to understand Clorox better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Clorox (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.