It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Viavi Solutions Inc. (NASDAQ:VIAV) share price is down 38% in the last year. That contrasts poorly with the market return of 22%. To make matters worse, the returns over three years have also been really disappointing (the share price is 33% lower than three years ago). The falls have accelerated recently, with the share price down 28% in the last three months.

With the stock having lost 8.1% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for Viavi Solutions

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...' 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 unfortunate twelve months during which the Viavi Solutions share price fell, it actually saw its earnings per share (EPS) improve by 71%. It could be that the share price was previously over-hyped.

It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's easy to justify a look at some other metrics.

On the other hand, we're certainly perturbed by the 14% decline in Viavi Solutions' revenue. If the market sees the weak revenue as jeopardising EPS, that could explain the lower share price.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We know that Viavi Solutions has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Viavi Solutions stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Investors in Viavi Solutions had a tough year, with a total loss of 38%, against a market gain of about 22%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6% over the last half decade. 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. If you would like to research Viavi Solutions in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.