While shareholders of PSI Software (ETR:PSAN) are in the black over 5 years, those who bought a week ago aren't so fortunate

PSI Software SE (ETR:PSAN) shareholders might be concerned after seeing the share price drop 15% in the last month. On the bright side the share price is up over the last half decade. In that time, it is up 44%, which isn't bad, but is below the market return of 65%. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 38% decline over the last three years: that's a long time to wait for profits.

Although PSI Software has shed €46m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

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PSI Software isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, PSI Software can boast revenue growth at a rate of 4.3% per year. That's not a very high growth rate considering the bottom line. While it's hard to say just how much value the company added over five years, the annualised share price gain of 8% seems about right. We'd be looking for the underlying business to grow revenue a bit faster.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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 The Total Shareholder Return (TSR)?

We've already covered PSI Software's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. PSI Software's TSR of 49% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's nice to see that PSI Software shareholders have received a total shareholder return of 16% over the last year. That's better than the annualised return of 8% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. You could get a better understanding of PSI Software's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German 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.