As Dassault Systèmes (EPA:DSY) increases 8.0% this past week, investors may now be noticing the company's three-year earnings growth

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Dassault Systèmes SE (EPA:DSY) shareholders, since the share price is down 32% in the last three years, falling well short of the market return of around 9.1%. And over the last year the share price fell 22%, so we doubt many shareholders are delighted. On the other hand the share price has bounced 8.0% over the last week.

While the stock has risen 8.0% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

View our latest analysis for Dassault Systèmes

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Although the share price is down over three years, Dassault Systèmes actually managed to grow EPS by 15% per year in that time. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

The modest 0.7% dividend yield is unlikely to be guiding the market view of the stock. Revenue is actually up 8.5% over the three years, so the share price drop doesn't seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching Dassault Systèmes more closely, as sometimes stocks fall unfairly. This could present 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).

Dassault Systèmes is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Dassault Systèmes in this interactive graph of future profit estimates.

A Different Perspective

Investors in Dassault Systèmes had a tough year, with a total loss of 22% (including dividends), against a market gain of about 0.09%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before deciding if you like the current share price, check how Dassault Systèmes scores on these 3 valuation metrics.

We will like Dassault Systèmes better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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