The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market – but in the process, they risk under-performance. Unfortunately the Jenoptik AG (ETR:JEN) share price slid 39% over twelve months. That falls noticeably short of the market return of around 5.5%. To make matters worse, the returns over three years have also been really disappointing (the share price is 36% lower than three years ago). Even worse, it’s down 30% in about a month, which isn’t fun at all. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.

It’s worthwhile assessing if the company’s economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let’s do just that.

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To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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).

Even though the Jenoptik share price is down over the year, its EPS actually improved. It’s quite possible that growth expectations may have been unreasonable in the past.

It’s surprising to see the share price fall so much, despite the improved EPS. So it’s easy to justify a look at some other metrics.

Jenoptik’s revenue is actually up 4.7% over the last year. Since we can’t easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Jenoptik is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

While the broader market gained around 5.5% in the last year, Jenoptik shareholders lost 38% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 2% per year over five years. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example – Jenoptik has 1 warning sign we think you should be aware of.