Despite delivering investors losses of 52% over the past 5 years, Netcompany Group (CPH:NETC) has been growing its earnings

This week we saw the Netcompany Group A/S (CPH:NETC) share price climb by 18%. But that can't change the reality that over the longer term (five years), the returns have been really quite dismal. Indeed, the share price is down 52% in the period. So is the recent increase sufficient to restore confidence in the stock? Not yet. But it could be that the fall was overdone.

While the last five years has been tough for Netcompany Group shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

While the share price declined over five years, Netcompany Group actually managed to increase EPS by an average of 1.9% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.

By glancing at these numbers, we'd posit that the the market had expectations of much higher growth, five years ago. Having said that, we might get a better idea of what's going on with the stock by looking at other metrics.

In contrast to the share price, revenue has actually increased by 19% a year in the five year period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

We know that Netcompany Group has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Netcompany Group will earn in the future (free profit forecasts).

A Different Perspective

While it's never nice to take a loss, Netcompany Group shareholders can take comfort that their trailing twelve month loss of 6.7% wasn't as bad as the market loss of around 30%. What is more upsetting is the 9% per annum loss investors have suffered over the last half decade. While the losses are slowing we doubt many shareholders are happy with the stock. Before deciding if you like the current share price, check how Netcompany Group scores on these 3 valuation metrics.

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