As an investor its worth striving to ensure your overall portfolio beats the market average. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Northland Power Inc. (TSE:NPI) shareholders have had that experience, with the share price dropping 46% in three years, versus a market return of about 25%. On the other hand the share price has bounced 6.9% over the last week.

The recent uptick of 6.9% could be a positive sign of things to come, so let's take a look at historical fundamentals.

Check out our latest analysis for Northland Power

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the three years that the share price fell, Northland Power's earnings per share (EPS) dropped by 36% each year. This fall in the EPS is worse than the 19% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. With a P/E ratio of 89.52, it's fair to say the market sees a brighter future for the business.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on Northland Power's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Northland Power's TSR for the last 3 years was -39%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Northland Power shareholders are up 2.6% for the year (even including dividends). Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 1.7% per year over five year. This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Northland Power better, we need to consider many other factors. For instance, we've identified 4 warning signs for Northland Power (2 are significant) that you should be aware of.