Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term Oceania Healthcare Limited (NZSE:OCA) shareholders. Unfortunately, they have held through a 58% decline in the share price in that time. The more recent news is of little comfort, with the share price down 26% in a year.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

View our latest analysis for Oceania Healthcare

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During the three years that the share price fell, Oceania Healthcare's earnings per share (EPS) dropped by 36% each year. In comparison the 25% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

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

We know that Oceania Healthcare has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Oceania Healthcare's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that Oceania Healthcare's TSR, which was a 54% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

While the broader market lost about 0.6% in the twelve months, Oceania Healthcare shareholders did even worse, losing 24%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. 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. It's always interesting to track share price performance over the longer term. But to understand Oceania Healthcare better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Oceania Healthcare (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.