Burberry Group (LON:BRBY) adds UK£230m to market cap in the past 7 days, though investors from three years ago are still down 35%

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term Burberry Group plc (LON:BRBY) shareholders have had that experience, with the share price dropping 40% in three years, versus a market return of about 41%. On the other hand, we note it's up 8.5% in about a month.

While the stock has risen 5.1% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

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.

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Burberry Group saw its share price decline over the three years in which its EPS also dropped, falling to a loss. This was, in part, due to extraordinary items impacting earnings. Due to the loss, it's not easy to use EPS as a reliable guide to the business. However, we can say we'd expect to see a falling share price in this scenario.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Burberry Group's key metrics by checking this interactive graph of Burberry Group's earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We've already covered Burberry Group's share price action, but we should also mention its total shareholder return (TSR). 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. Dividends have been really beneficial for Burberry Group shareholders, and that cash payout explains why its total shareholder loss of 35%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

It's nice to see that Burberry Group shareholders have received a total shareholder return of 37% over the last year. That certainly beats the loss of about 3% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. If you would like to research Burberry Group in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

Of course Burberry Group 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 British 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.