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. That downside risk was realized by Halliburton Company (NYSE:HAL) shareholders over the last year, as the share price declined 25%. That contrasts poorly with the market return of 25%. On the other hand, the stock is actually up 6.9% over three years. More recently, the share price has dropped a further 15% in a month.

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.

There is no denying that markets are sometimes efficient, but prices do not always reflect 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, Halliburton had to report a 1.7% decline in EPS over the last year. The share price decline of 25% is actually more than the EPS drop. So it seems the market was too confident about the business, a year ago. The P/E ratio of 9.38 also points to the negative market sentiment.

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

We know that Halliburton 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 Halliburton stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Halliburton shareholders are down 23% for the year (even including dividends), but the market itself is up 25%. 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 4% per year over half a decade. 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 Halliburton better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Halliburton you should be aware of.

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 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.