Investing in stocks comes with the risk that the share price will fall. And unfortunately for Varroc Engineering Limited (NSE:VARROC) shareholders, the stock is a lot lower today than it was a year ago. To wit the share price is down 56% in that time. Because Varroc Engineering hasn't been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 12% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

View our latest analysis for Varroc Engineering

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...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Unfortunately Varroc Engineering reported an EPS drop of 4.0% for the last year. This reduction in EPS is not as bad as the 56% share price fall. So it seems the market was too confident about the business, a year ago.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

A Different Perspective

Varroc Engineering shareholders are down 55% for the year (even including dividends), even worse than the market loss of 10%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 12%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Before forming an opinion on Varroc Engineering you might want to consider these 3 valuation metrics.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.