It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For example, the Bank of Georgia Group PLC (LON:BGEO) share price has soared 218% in the last three years. That sort of return is as solid as granite. We note the stock price is up 5.3% in the last seven days.

Since the stock has added UK￡78m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for Bank of Georgia Group

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. 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.

Bank of Georgia Group was able to grow its EPS at 80% per year over three years, sending the share price higher. The average annual share price increase of 47% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time. We'd venture the lowish P/E ratio of 3.26 also reflects the negative sentiment around the stock.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that Bank of Georgia Group has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Bank of Georgia Group stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Bank of Georgia Group, it has a TSR of 282% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that Bank of Georgia Group has rewarded shareholders with a total shareholder return of 58% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 28%. Therefore it seems like sentiment around the company has been positive lately. 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 Bank of Georgia Group better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Bank of Georgia Group (including 1 which is a bit concerning) .