It’s not possible to invest over long periods without making some bad investments. But you have a problem if you face massive losses more than once in a while. So consider, for a moment, the misfortune of Aeris Resources Limited (ASX:AIS) investors who have held the stock for three years as it declined a whopping 80%. That would certainly shake our confidence in the decision to own the stock. On the other hand, we note it’s up 9.1% in about a month. While a drop like that is definitely a body blow, money isn’t as important as health and happiness.

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.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Aeris Resources became profitable within the last five years. We would usually expect to see the share price rise as a result. So it’s worth looking at other metrics to try to understand the share price move.

Revenue is actually up 12% over the three years, so the share price drop doesn’t seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching Aeris Resources more closely, as sometimes stocks fall unfairly. This could present an opportunity.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

We know that Aeris Resources has improved its bottom line lately, but what does the future have in store? So we recommend checking out this free report showing consensus forecasts

It’s nice to see that Aeris Resources shareholders have received a total shareholder return of 9.1% over the last year. That’s better than the annualised return of 7% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 Aeris Resources .