On average, over time, stock markets tend to rise higher. This makes investing attractive. But if when you choose to buy stocks, some of them will be below average performers. For example, the Main Street Capital Corporation (NYSE:MAIN), share price is up over the last year, but its gain of 21% trails the market return. Longer term, the stock is up 17% in three years.

So let's assess the underlying fundamentals over the last 1 year and see if they've moved in lock-step with shareholder returns.

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 last year Main Street Capital grew its earnings per share (EPS) by 63%. It's fair to say that the share price gain of 21% did not keep pace with the EPS growth. So it seems like the market has cooled on Main Street Capital, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 9.21.

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

We know that Main Street Capital has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Main Street Capital will grow revenue in the future.

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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Main Street Capital the TSR over the last 1 year was 32%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's nice to see that Main Street Capital shareholders have received a total shareholder return of 32% over the last year. And that does include the dividend. That's better than the annualised return of 12% 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. It's always interesting to track share price performance over the longer term. But to understand Main Street Capital better, we need to consider many other factors. Take risks, for example - Main Street Capital has 5 warning signs (and 2 which are a bit unpleasant) we think you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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