Valhi, Inc. (NYSE:VHI) shareholders might understandably be very concerned that the share price has dropped 30% in the last quarter. But the silver lining is the stock is up over five years. However we are not very impressed because the share price is only up 62%, less than the market return of 96%. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 45% decline over the last three years: that's a long time to wait for profits.

So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 the five years of share price growth, Valhi moved from a loss to profitability. That's generally thought to be a genuine positive, so investors may expect to see an increasing share price.

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

This free interactive report on Valhi's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Valhi the TSR over the last 5 years was 76%, 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 Valhi has rewarded shareholders with a total shareholder return of 12% in the last twelve months. Of course, that includes the dividend. However, the TSR over five years, coming in at 12% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand Valhi better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Valhi (of which 1 is concerning!) you should know about.

We will like Valhi better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.