Abercrombie & Fitch Co. (NYSE:ANF) shareholders might be concerned after seeing the share price drop 28% in the last month. But that doesn't undermine the fantastic longer term performance (measured over five years). In that time, the share price has soared some 570% higher! So we don't think the recent decline in the share price means its story is a sad one. The most important thing for savvy investors to consider is whether the underlying business can justify the share price gain. Anyone who held for that rewarding ride would probably be keen to talk about it.

In light of the stock dropping 5.0% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.

Check out our latest analysis for Abercrombie & Fitch

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

Over half a decade, Abercrombie & Fitch managed to grow its earnings per share at 67% a year. This EPS growth is higher than the 46% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.76.

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

It is of course excellent to see how Abercrombie & Fitch has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Abercrombie & Fitch's financial health with this free report on its balance sheet.

What About The Total Shareholder Return (TSR)?

We've already covered Abercrombie & Fitch'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. Abercrombie & Fitch's TSR of 580% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

Abercrombie & Fitch shareholders gained a total return of 10% during the year. Unfortunately this falls short of the market return. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 47% over five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 1 warning sign we've spotted with Abercrombie & Fitch .

But note: Abercrombie & Fitch may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.