Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the FORTEC Elektronik AG (ETR:FEV) share price slid 31% over twelve months. That contrasts poorly with the market return of 16%. Even if shareholders bought some time ago, they wouldn’t be particularly happy: the stock is down 29% in three years. Shareholders have had an even rougher run lately, with the share price down 22% in the last 90 days.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they’ve been consistent with returns.

Our free stock report includes 3 warning signs investors should be aware of before investing in FORTEC Elektronik. Read for free now.

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.

Unfortunately FORTEC Elektronik reported an EPS drop of 69% for the last year. The share price fall of 31% isn’t as bad as the reduction in earnings per share. So the market may not be too worried about the EPS figure, at the moment — or it may have expected earnings to drop faster.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into FORTEC Elektronik’s key metrics by checking this interactive graph of FORTEC Elektronik’s earnings, revenue and cash flow.

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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of FORTEC Elektronik, it has a TSR of -28% for the last 1 year. That exceeds its share price return that we previously mentioned. And there’s no prize for guessing that the dividend payments largely explain the divergence!

Investors in FORTEC Elektronik had a tough year, with a total loss of 28% (including dividends), against a market gain of about 16%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Case in point: We’ve spotted 3 warning signs for FORTEC Elektronik you should be aware of.