Investors can buy low cost index fund if they want to receive the average market return. But across the board there are plenty of stocks that underperform the market. That’s what has happened with the Turtle Beach Corporation (NASDAQ:TBCH) share price. It’s up 15% over three years, but that is below the market return. Unfortunately, the share price has fallen 3.1% over twelve months.

So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

Turtle Beach became profitable within the last three years. That would generally be considered a positive, so we’d expect the share price to be up.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of Turtle Beach’s earnings, revenue and cash flow.

While the broader market gained around 15% in the last year, Turtle Beach shareholders lost 3.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 1.7% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It’s always interesting to track share price performance over the longer term. But to understand Turtle Beach better, we need to consider many other factors. For example, we’ve discovered 2 warning signs for Turtle Beach that you should be aware of before investing here.

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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.