Long term investing can be life changing when you buy and hold the truly great businesses. While not every stock performs well, when investors win, they can win big. For example, the Eli Lilly and Company (NYSE:LLY) share price is up a whopping 753% in the last half decade, a handsome return for long term holders. This just goes to show the value creation that some businesses can achieve. It really delights us to see such great share price performance for investors.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

See our latest analysis for Eli Lilly

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 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, Eli Lilly achieved compound earnings per share (EPS) growth of 14% per year. This EPS growth is lower than the 54% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth. This optimism is visible in its fairly high P/E ratio of 112.39.

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

We know that Eli Lilly has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. As it happens, Eli Lilly's TSR for the last 5 years was 814%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Eli Lilly has rewarded shareholders with a total shareholder return of 52% in the last twelve months. Of course, that includes the dividend. However, the TSR over five years, coming in at 56% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand Eli Lilly better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Eli Lilly , and understanding them should be part of your investment process.