Despite constant attempts by analysts and the media to complicate the basics of investing, there are really only three ways a stock can create value for its shareholders:

  1. Dividends.
  2. Earnings growth.
  3. Changes in valuation multiples.

In this series, we drill down on one company's returns to see how each of those three has played a role over the past decade. Step on up, Starbucks (Nasdaq: SBUX).

Starbucks shares returned 377% over the past decade. How'd they get there?

Dividends accounted for only a small part of it. Without dividends, shares returned 366% over the past 10 years.

Earnings growth was strong. Starbucks' normalized earnings per share grew at an average rate of 19.9% per year from 2001 until today. That's far faster than what other fast-food outlets like McDonald's (NYSE: MCD) or Yum! Brands (NYSE: YUM) achieved -- and both logged solid performances over the past decade.

But think about this: Starbucks' earnings grew by over sixfold during the past decade, yet its shares grew by around half that amount. Why? This chart explains it:

Source: S&P Capital IQ.

Starbucks' P/E ratio has dropped by about 25% over the past decade. That's prevented a lot of the company's earnings growth from showing up in shareholder returns. The market simply doesn't value its earnings as much as it did in the past.

That trend could continue. At 27 times earnings, shares still aren't terribly attractive from a value-investor standpoint. The company's earnings prospects may still be good -- that's why some Motley Fool newsletters recommend the shares -- but high valuations might dampen how much of those results find their way into shareholder returns going forward. That's the price you pay for paying a high price.

Why is this stuff worth paying attention to? It's important to know not only how much a stock has returned, but where those returns came from. Sometimes earnings grow, but the market isn't willing to pay as much for those earnings. Sometimes earnings fall, but the market bids shares higher anyway. Sometimes both earnings and earnings multiples stay flat, but a company generates returns through dividends. Sometimes everything works together, and returns surge. Sometimes nothing works and they crash. All tell a different story about the state of a company. Not knowing why something happened can be just as dangerous as not knowing that something happened at all.