Zimmer Biomet Holdings (NYSE:ZBH) earnings and shareholder returns have been trending downwards for the last year, but the stock rises 5.6% this past week

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the Zimmer Biomet Holdings, Inc. (NYSE:ZBH) share price slid 17% over twelve months. That's well below the market return of 9.0%. Taking the longer term view, the stock fell 16% over the last three years. Unfortunately the share price momentum is still quite negative, with prices down 9.6% in thirty days.

While the last year has been tough for Zimmer Biomet Holdings shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Unhappily, Zimmer Biomet Holdings had to report a 9.3% decline in EPS over the last year. This reduction in EPS is not as bad as the 17% 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).

This free interactive report on Zimmer Biomet Holdings' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 9.0% in the last year, Zimmer Biomet Holdings 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 0.9% 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. Take risks, for example - Zimmer Biomet Holdings has 2 warning signs we think you should be aware of.

We will like Zimmer Biomet Holdings 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 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.