It hasn’t been the best quarter for SecureWorks Corp. (NASDAQ:SCWX) shareholders, since the share price has fallen 17% in that time. But at least the stock is up over the last five years. In that time, it is up 46%, which isn’t bad, but is below the market return of 122%.
Let’s take a look at the underlying fundamentals over the longer term, and see if they’ve been consistent with shareholders returns.
SecureWorks wasn’t profitable in the last twelve months, it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last 5 years SecureWorks saw its revenue grow at 5.9% per year. That’s not a very high growth rate considering the bottom line. It’s probably fair to say that the modest growth is reflected in the modest share price gain of 8% per year. It seems likely that we’ll have to zoom in on the data, including profits, to understand if there is an opportunity here.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at SecureWorks’ financial health with this free report on its balance sheet.
A Different Perspective
We’re pleased to report that SecureWorks shareholders have received a total shareholder return of 19% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 8% per year), it would seem that the stock’s performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Case in point: We’ve spotted 4 warning signs for SecureWorks you should be aware of, and 1 of them makes us a bit uncomfortable.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.