Article at a glance:

Measuring stock market performance

• One way to assess a company is by looking at its stock market performance. The most common approach is to calculate a company’s total returns to shareholders (TRS).
• Over the short term, however, TRS reflects expectations of future performance more than it reflects a company’s underlying performance and health.
• Other measures, such as market value added (MVA) and the market-value-to-capital ratio, complement TRS by calculating different aspects of a company's performance.
• Reverse engineering a company’s share price from its underlying fundamentals can determine how much growth the company needs to justify the current share price.