Verint Systems (NASDAQ:VRNT) jumps 30% this week, though earnings growth is still tracking behind five-year shareholder returns

Verint Systems Inc. (NASDAQ:VRNT) shareholders will doubtless be very grateful to see the share price up 44% in the last month. But over the last half decade, the stock has not performed well. After all, the share price is down 38% in that time, significantly under-performing the market.

While the stock has risen 30% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for Verint Systems

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.

Verint Systems became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.

Arguably, the revenue drop of 3.3% a year for half a decade suggests that the company can't grow in the long term. This has probably encouraged some shareholders to sell down the stock.

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

It is of course excellent to see how Verint Systems has grown profits over the years, but the future is more important for shareholders. This free interactive report on Verint Systems' balance sheet strength is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

We've already covered Verint Systems' share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Verint Systems hasn't been paying dividends, but its TSR of 21% exceeds its share price return of -38%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

Verint Systems shareholders are up 12% for the year. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 4% over half a decade It is possible that returns will improve along with the business fundamentals. 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. Take risks, for example - Verint Systems has 1 warning sign we think you should be aware of.

Of course Verint Systems may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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