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The nature of investing is that you win some, and you lose some. Anyone who held Surface Oncology, Inc. (NASDAQ:SURF) over the last year knows what a loser feels like. The share price has slid 58% in that time. At least the damage isn’t so bad if you look at the last three years, since the stock is down 10% in that time. Shareholders have had an even rougher run lately, with the share price down 43% in the last 90 days.

Now let’s have a look at the company’s fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

View our latest analysis for Surface Oncology

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 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.

During the last year Surface Oncology grew its earnings per share, moving from a loss to a profit.

We’re surprised that the share price is lower given that improvement. If the company can sustain the earnings growth, this might be an inflection point for the business, which would make right now a really interesting time to study it more closely.

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

earnings-per-share-growth

It is of course excellent to see how Surface Oncology has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Over the last year, Surface Oncology shareholders took a loss of 58%. In contrast the market gained about 15%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 3% per year isn’t as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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. For instance, we’ve identified 3 warning signs for Surface Oncology (1 is a bit unpleasant) that you should be aware of.

But note: Surface Oncology 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).

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