If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Ziff Davis, Inc. (NASDAQ:ZD) shareholders know that all too well, since the share price is down considerably over three years. Unfortunately, they have held through a 62% decline in the share price in that time. The more recent news is of little comfort, with the share price down 39% in a year. The last week also saw the share price slip down another 6.9%.

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

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There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

During the three years that the share price fell, Ziff Davis' earnings per share (EPS) dropped by 40% each year. This fall in the EPS is worse than the 28% compound annual share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.

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

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of Ziff Davis' earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 15% in the last year, Ziff Davis shareholders lost 39%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 example, we've discovered 1 warning sign for Ziff Davis that you should be aware of before investing here.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are 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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