Despite shrinking by US$778m in the past week, Dynatrace (NYSE:DT) shareholders are still up 22% over 5 years

It hasn't been the best quarter for Dynatrace, Inc. (NYSE:DT) shareholders, since the share price has fallen 12% in that time. But the silver lining is the stock is up over five years. In that time, it is up 22%, which isn't bad, but is below the market return of 94%.

In light of the stock dropping 5.1% 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.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the five years of share price growth, Dynatrace moved from a loss to profitability. That's generally thought to be a genuine positive, so investors may expect to see an increasing share price. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Dynatrace share price is up 20% in the last three years. In the same period, EPS is up 124% per year. This EPS growth is higher than the 6% average annual increase in the share price over the same three years. Therefore, it seems the market has moderated its expectations for growth, somewhat.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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

A Different Perspective

Investors in Dynatrace had a tough year, with a total loss of 6.0%, against a market gain of about 21%. 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. On the bright side, long term shareholders have made money, with a gain of 4% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Dynatrace better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Dynatrace you should be aware of.

Of course Dynatrace 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.