For many, the main point of investing in the stock market is to achieve spectacular returns. And we've seen some truly amazing gains over the years. To wit, the Teekay Tankers Ltd. (NYSE:TNK) share price has soared 539% over five years. This just goes to show the value creation that some businesses can achieve. On top of that, the share price is up 13% in about a quarter. But this could be related to the strong market, which is up 12% in the last three months. Anyone who held for that rewarding ride would probably be keen to talk about it.

Although Teekay Tankers has shed US$62m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

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 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 the last half decade, Teekay Tankers became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Teekay Tankers share price is up 318% in the last three years. During the same period, EPS grew by 80% each year. This EPS growth is higher than the 61% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This unenthusiastic sentiment is reflected in the stock's reasonably modest P/E ratio of 3.67.

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

We know that Teekay Tankers has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Teekay Tankers' financial health with this free report on its balance sheet.

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 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Teekay Tankers the TSR over the last 5 years was 567%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Teekay Tankers' TSR for the year was broadly in line with the market average, at 28%. It has to be noted that the recent return falls short of the 46% shareholders have gained each year, over half a decade. More recently, the share price growth has slowed. But it has to be said the overall picture is one of good long term and short term performance. Arguably that makes Teekay Tankers a stock worth watching. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Teekay Tankers you should be aware of, and 1 of them shouldn't be ignored.

Of course Teekay Tankers 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 American exchanges.

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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.