If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. For example, the Ituran Location and Control Ltd. (NASDAQ:ITRN) share price is up 68% in the last year, clearly besting the market return of around 42% (not including dividends). So that should have shareholders smiling. Unfortunately the longer term returns are not so good, with the stock falling 12% in the last three years.

View our latest analysis for Ituran Location and Control

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Ituran Location and Control went from making a loss to reporting a profit, in the last year.

While it's good to see positive EPS of US$0.87 this year, the loss wasn't too bad last year. We'd argue the positive share price reflects the move to profitability. Inflection points like this can be a great time to take a closer look at a company.

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

We know that Ituran Location and Control has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Ituran Location and Control will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. As it happens, Ituran Location and Control's TSR for the last year was 72%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It's nice to see that Ituran Location and Control shareholders have received a total shareholder return of 72% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 6% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Ituran Location and Control better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Ituran Location and Control you should be aware of.

Of course Ituran Location and Control may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

This article by Simply Wall St is general in nature. 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.

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