Shareholders in Atrium Ljungberg (STO:ATRLJ B) are in the red if they invested a year ago

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Atrium Ljungberg AB (publ) (STO:ATRLJ B) share price slid 18% over twelve months. That's disappointing when you consider the market returned 7.5%. However, the longer term returns haven't been so bad, with the stock down 1.4% in the last three years.

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.

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There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

Atrium Ljungberg stole the show with its EPS rocketing, in the last year. The rate of growth may not be sustainable, but it is still really positive. So we are surprised the share price is down. So it's worth taking a look at some other metrics.

In contrast, the 7.4% drop in revenue is a real concern. Many investors see falling revenue as a likely precursor to lower earnings, so this could well explain the weak share price.

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

We know that Atrium Ljungberg has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Atrium Ljungberg will earn in the future (free profit forecasts).

A Different Perspective

While the broader market gained around 7.5% in the last year, Atrium Ljungberg shareholders lost 16% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 2%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Atrium Ljungberg better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Atrium Ljungberg (of which 1 is significant!) you should know about.

We will like Atrium Ljungberg better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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