The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in Chesapeake Utilities Corporation (NYSE:CPK) have tasted that bitter downside in the last year, as the share price dropped 22%. That's disappointing when you consider the market returned 18%. On the other hand, the stock is actually up 4.2% over three years. It's down 24% in about a quarter.

If the past week is anything to go by, investor sentiment for Chesapeake Utilities isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Chesapeake Utilities

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unfortunately Chesapeake Utilities reported an EPS drop of 1.6% for the last year. This reduction in EPS is not as bad as the 22% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Chesapeake Utilities' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Chesapeake Utilities shareholders are down 21% for the year (even including dividends), but the market itself is up 18%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. 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. 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. Even so, be aware that Chesapeake Utilities is showing 2 warning signs in our investment analysis , you should know about...

We will like Chesapeake Utilities better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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.