Ramco Systems (NSE:RAMCOSYS) shareholders are still up 136% over 5 years despite pulling back 10% in the past week

Ramco Systems Limited (NSE:RAMCOSYS) shareholders might be concerned after seeing the share price drop 10% in the last week. But in stark contrast, the returns over the last half decade have impressed. In fact, the share price is 136% higher today. To some, the recent pullback wouldn't be surprising after such a fast rise. Ultimately business performance will determine whether the stock price continues the positive long term trend.

In light of the stock dropping 10% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.

See our latest analysis for Ramco Systems

Ramco Systems isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last 5 years Ramco Systems saw its revenue shrink by 3.4% per year. On the other hand, the share price done the opposite, gaining 19%, compound, each year. It just goes to show tht the market is forward looking, and it's not always easy to predict the future based on past trends. Still, we are a bit cautious in this kind of situation.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at Ramco Systems' financial health with this free report on its balance sheet.

A Different Perspective

Ramco Systems' TSR for the year was broadly in line with the market average, at 42%. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 19%. It is possible that management foresight will bring growth well into the future, even if the share price slows down. It's always interesting to track share price performance over the longer term. But to understand Ramco Systems better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Ramco Systems you should be aware of.

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 Indian 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.