The truth is that if you invest for long enough, you’re going to end up with some losing stocks. But long term OM Holdings Limited (ASX:OMH) shareholders have had a particularly rough ride in the last three year. Sadly for them, the share price is down 61% in that time. The more recent news is of little comfort, with the share price down 34% in a year. Furthermore, it’s down 19% in about a quarter. That’s not much fun for holders.

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. 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.

During the three years that the share price fell, OM Holdings’ earnings per share (EPS) dropped by 47% each year. This fall in the EPS is worse than the 27% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

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

It might be well worthwhile taking a look at our free report on OM Holdings’ earnings, revenue and cash flow.

While the broader market gained around 13% in the last year, OM Holdings shareholders lost 33% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2% over the last half decade. We realise that Baron Rothschild has said investors should “buy when there is blood on the streets”, but we caution that investors should first be sure they are buying a high quality business. It’s always interesting to track share price performance over the longer term. But to understand OM Holdings better, we need to consider many other factors. For example, we’ve discovered 1 warning sign for OM Holdings that you should be aware of before investing here.

But note: OM Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).