If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But long term The Scotts Miracle-Gro Company (NYSE:SMG) shareholders have had a particularly rough ride in the last three year. Sadly for them, the share price is down 70% in that time. Furthermore, it's down 36% in about a quarter. That's not much fun for holders.

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

Check out our latest analysis for Scotts Miracle-Gro

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...' 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.

We know that Scotts Miracle-Gro has been profitable in the past. However, it made a loss in the last twelve months, suggesting profit may be an unreliable metric at this stage. Other metrics may better explain the share price move.

Given the healthiness of the dividend payments, we doubt that they've concerned the market. However, the weak share price might be related to the fact revenue has been disappearing at a rate of 5.1% each year, over three years. This could have some investors worried about the longer term growth potential (or lack thereof).

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Scotts Miracle-Gro, it has a TSR of -67% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

Investors in Scotts Miracle-Gro had a tough year, with a total loss of 2.2% (including dividends), against a market gain of about 6.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 5% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand Scotts Miracle-Gro better, we need to consider many other factors. For instance, we've identified 3 warning signs for Scotts Miracle-Gro (1 shouldn't be ignored) that you should be aware of.

Of course Scotts Miracle-Gro may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.