Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Utah Medical Products, Inc. (NASDAQ:UTMD) have tasted that bitter downside in the last year, as the share price dropped 28%. That's disappointing when you consider the market returned 25%. However, the longer term returns haven't been so bad, with the stock down 22% 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.

View our latest analysis for Utah Medical Products

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 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, Utah Medical Products had to report a 4.4% decline in EPS over the last year. This reduction in EPS is not as bad as the 28% share price fall. This suggests the EPS fall has made some shareholders more nervous about the business.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Utah Medical Products' earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 25% in the last year, Utah Medical Products shareholders lost 27% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. 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. Before forming an opinion on Utah Medical Products you might want to consider these 3 valuation metrics.

Of course Utah Medical Products may not be the best stock to buy. So you may wish to see this free collection of growth stocks.