While not a mind-blowing move, it is good to see that the Questerre Energy Corporation (TSE:QEC) share price has gained 17% in the last three months. But the last three years have seen a terrible decline. To wit, the share price sky-dived 75% in that time. So it sure is nice to see a big of an improvement. The thing to think about is whether the business has really turned around.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

Questerre Energy became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. So it’s worth looking at other metrics to try to understand the share price move.

Revenue is actually up 24% over the three years, so the share price drop doesn’t seem to hinge on revenue, either. It’s probably worth investigating Questerre Energy further; while we may be missing something on this analysis, there might also be an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how Questerre Energy has grown profits over the years, but the future is more important for shareholders. This free interactive report on Questerre Energy’s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Questerre Energy shareholders are down 26% for the year, but the market itself is up 11%. 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 8.1% over the last half decade. 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. To that end, you should learn about the 4 warning signs we’ve spotted with Questerre Energy (including 1 which is doesn’t sit too well with us) .