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. For example, the Hinduja Global Solutions Limited (NSE:HGS) share price is down 26% in the last year. That's well bellow the market return of -12%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 1.9% in three years. Shareholders have had an even rougher run lately, with the share price down 11% in the last 90 days. However, one could argue that the price has been influenced by the general market, which is down 9.5% in the same timeframe.

See our latest analysis for Hinduja Global Solutions

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Unhappily, Hinduja Global Solutions had to report a 6.8% decline in EPS over the last year. The share price decline of 26% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The P/E ratio of 6.76 also points to the negative market sentiment.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into Hinduja Global Solutions's key metrics by checking this interactive graph of Hinduja Global Solutions's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Hinduja Global Solutions's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Hinduja Global Solutions's TSR of was a loss of 25% for the year. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

While the broader market lost about 12% in the twelve months, Hinduja Global Solutions shareholders did even worse, losing 25% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 1.2% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before deciding if you like the current share price, check how Hinduja Global Solutions scores on these 3 valuation metrics.