It might be of some concern to shareholders to see the Ergomed plc (LON:ERGO) share price down 18% in the last month. But that doesn't change the fact that the returns over the last half decade have been spectacular. To be precise, the stock price is 411% higher than it was five years ago, a wonderful performance by any measure. So we don't think the recent decline in the share price means its story is a sad one. Of course what matters most is whether the business can improve itself sustainably, thus justifying a higher price.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

View our latest analysis for Ergomed

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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).

During the five years of share price growth, Ergomed moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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

A Different Perspective

We regret to report that Ergomed shareholders are down 13% for the year. Unfortunately, that's worse than the broader market decline of 0.1%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 39% 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 Ergomed better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Ergomed you should know about.

But note: Ergomed 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).