Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the Patterson-UTI Energy, Inc. (NASDAQ:PTEN) share price is down 42% in the last year. That's disappointing when you consider the market returned 38%. However, the longer term returns haven't been so bad, with the stock down 14% in the last three years. Shareholders have had an even rougher run lately, with the share price down 25% in the last 90 days.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

View our latest analysis for Patterson-UTI Energy

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unhappily, Patterson-UTI Energy had to report a 80% decline in EPS over the last year. The share price fall of 42% isn't as bad as the reduction in earnings per share. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Patterson-UTI Energy has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Patterson-UTI Energy stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Investors in Patterson-UTI Energy had a tough year, with a total loss of 40% (including dividends), against a market gain of about 38%. 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. On the bright side, long term shareholders have made money, with a gain of 0.6% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Patterson-UTI Energy better, we need to consider many other factors. For instance, we've identified 4 warning signs for Patterson-UTI Energy (1 shouldn't be ignored) that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.