Many investors define successful investing as beating the market average over the long term. But if you try your hand at stock picking, you risk returning less than the market. Unfortunately, that's been the case for longer term ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) shareholders, since the share price is down 75% in the last three years, falling well short of the market return of around 35%. Even worse, it's down 23% in about a month, which isn't fun at all.

While the last three years has been tough for ZIM Integrated Shipping Services shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

View our latest analysis for ZIM Integrated Shipping Services

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 five years of share price growth, ZIM Integrated Shipping Services moved from a loss to profitability. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.

It's quite likely that the declining dividend has caused some investors to sell their shares, pushing the price lower in the process. This situation was no doubt compounded by the fact revenue is down 25% per year over three years.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We know that ZIM Integrated Shipping Services has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling ZIM Integrated Shipping Services stock, you should check out this free report showing analyst profit forecasts.

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 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for ZIM Integrated Shipping Services the TSR over the last 3 years was -30%, 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 nice to see that ZIM Integrated Shipping Services shareholders have gained 45% (in total) over the last year. That's including the dividend. This recent result is much better than the 9% drop suffered by shareholders each year (on average) over the last three. The optimist would say this is evidence that the stock has bottomed, and better days lie ahead. It's always interesting to track share price performance over the longer term. But to understand ZIM Integrated Shipping Services better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for ZIM Integrated Shipping Services (of which 1 is concerning!) you should know about.

But note: ZIM Integrated Shipping Services may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.