Not the best quarter since Formpipe Software AB (published) (STO:FPIP) shareholders, as the share price fell 24% during this period. On the positive side, returns have been quite good over the past half-decade. It returned a market beating 77% during that time.

In light of the stock’s 12% drop over the past week, we want to look at the longer-term story and see if fundamentals have been driving the company’s positive five-year performance.

Check out our latest review for Formpipe Software

While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying trading performance. By comparing earnings per share (EPS) and share price changes over time, we can get an idea of ​​how investors’ attitudes toward a company change over time.

In five years of share price growth, Formpipe Software has actually seen its EPS drop 1.8% annually.

Looking at these numbers, we would say that the decline in earnings per share is not representative of how the company has changed over the years. 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.

On the other hand, the revenue growth of 3.9% per year is probably considered proof that Formpipe Software is growing, a real positive. In this case, the company can sacrifice current earnings per share to drive growth.

The image below shows how earnings and income have tracked over time (if you click on the image you can see more details).

It is good to see that there has been significant insider buying over the past three months. This is a positive point. On the other hand, we believe revenue and earnings trends are much more meaningful measures of the business. This free a report showing analyst forecasts should help you get an idea of ​​the Formpipe software

What about dividends?

It is important to consider the total shareholder return, as well as the stock price return, for a given stock. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. So for companies that pay a generous dividend, the TSR is often much higher than the stock price return. We note that for Formpipe Software the TSR over the past 5 years was 100%, which is better than the stock price return mentioned above. The dividends paid by the company thus inflated the total return to shareholders.

A different perspective

While the broader market lost around 21% in the twelve months, Formpipe Software shareholders fared even worse, losing 23% (even including dividends). However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. On the positive side, long-term shareholders have made money, with a gain of 15% per year over half a decade. It could be that the recent selloff is an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. For example, we have identified 3 warning signs for Formpipe software (1 makes us a little uneasy) that you should be aware of.

Formpipe Software isn’t the only stock insiders are buying. So take a look at this free list of growing companies with insider buying.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on SE exchanges.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.