Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Unfortunately the Longino & Cardenal S.p.A. (BIT:LON) share price slid 11% over twelve months. That falls noticeably short of the market return of around 21%. Longino & Cardenal hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time.

See our latest analysis for Longino & Cardenal

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Even though the Longino & Cardenal 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.

Longino & Cardenal's revenue is actually up 7.6% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

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

This free interactive report on Longino & Cardenal's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Given that the market gained 21% in the last year, Longino & Cardenal shareholders might be miffed that they lost 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock flat over the last three months, the market now seems fairly ambivalent about the business. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand Longino & Cardenal better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Longino & Cardenal , and understanding them should be part of your investment process.

But note: Longino & Cardenal 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).

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.