The one-year underlying earnings growth at Implenia (VTX:IMPN) is promising, but the shareholders are still in the red over that time

The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Unfortunately the Implenia AG (VTX:IMPN) share price slid 34% over twelve months. That's well below the market return of 7.2%. On the other hand, the stock is actually up 29% over three years. Unfortunately the share price momentum is still quite negative, with prices down 13% in thirty days.

After losing 8.4% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for Implenia

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 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.

During the unfortunate twelve months during which the Implenia share price fell, it actually saw its earnings per share (EPS) improve by 35%. It's quite possible that growth expectations may have been unreasonable in the past.

The divergence between the EPS and the share price is quite notable, during the year. But we might find some different metrics explain the share price movements better.

With a low yield of 1.9% we doubt that the dividend influences the share price much. Revenue was fairly steady year on year, which isn't usually such a bad thing. However, it is certainly possible the market was expecting an uptick in revenue, and that the share price fall reflects that disappointment.

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

We know that Implenia has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Implenia's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Implenia shareholders are down 32% for the year (even including dividends), but the market itself is up 7.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 2% 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. 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. Even so, be aware that Implenia is showing 3 warning signs in our investment analysis , and 2 of those are a bit unpleasant...

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com