Par Pacific Holdings (NYSE:PARR) sheds US$140m, company earnings and investor returns have been trending downwards for past year

It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Par Pacific Holdings, Inc. (NYSE:PARR) have tasted that bitter downside in the last year, as the share price dropped 47%. That falls noticeably short of the market return of around 22%. On the bright side, the stock is actually up 27% in the last three years. Shareholders have had an even rougher run lately, with the share price down 23% in the last 90 days.

With the stock having lost 11% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for Par Pacific Holdings

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Unfortunately Par Pacific Holdings reported an EPS drop of 22% for the last year. This reduction in EPS is not as bad as the 47% share price fall. This suggests the EPS fall has made some shareholders more nervous about the business. The less favorable sentiment is reflected in its current P/E ratio of 2.27.

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

We know that Par Pacific Holdings has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Par Pacific Holdings' financial health with this free report on its balance sheet.

A Different Perspective

Par Pacific Holdings shareholders are down 47% for the year, but the market itself is up 22%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3% per year over five years. 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. 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. To that end, you should learn about the 3 warning signs we've spotted with Par Pacific Holdings (including 1 which can't be ignored) .

But note: Par Pacific 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).

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.