secunet Security Networks (ETR:YSN) shares are down 7.6% over the past week as three-year earnings and shareholder returns continue to decline

As an investor, mistakes are inevitable. But really bad investments should be rare. So think about the long-term shareholders secunet Security Networks Aktiengesellschaft (ETR:YSN); the stock has fallen a whopping 78% in the last three years. That would be a worrying experience. And the ride hasn’t gotten any smoother in recent memory over the past year, with the stock down 55% in that time. What’s more, it’s fallen 32% in about a quarter. That’s not exactly a happy experience for shareholders. We note that the company has reported results fairly recently; and the market isn’t thrilled. You can check out the latest numbers in our company report.

After losing 7.6% last week, it’s worth taking a look at the company’s fundamentals to see what conclusions can be drawn from its performance so far.

See our latest analysis for secunet security network

While the efficient markets hypothesis is still taught by some, it has been proven that markets are overly reactive dynamic systems and investors are not always rational. 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).

secunet Security Networks has seen its EPS decline at a compound annual rate of 12% over the past three years. The 40% share price decline is actually steeper than the EPS decline. It is therefore likely that the EPS decline has disappointed the market, leaving investors uncertain about whether to buy.

How EPS has changed over time can be seen in the chart below (click on the chart to see the exact values).

We are pleased to report that the CEO is paid more modestly than most CEOs at similarly capitalized companies. But while CEO compensation is always worth checking, the really important question is whether the company can grow earnings in the future. Before buying or selling a stock, we always recommend a thorough examination of historical growth trends, available here.

Another perspective

Investors in secunet Security Networks had a tough year, with a total loss of 54% (including dividends), compared to a market gain of around 8.7%. Even the share prices of good stocks sometimes fall, but we want to see an improvement in the fundamentals of a company before we get too interested. Unfortunately, last year’s results cap off a bad run, and shareholders are facing a total loss of 2% per year for five years. We realize that Baron Rothschild said that investors should “buy when there’s blood in the streets,” but we caution that investors should first make sure they are buying a high-quality company. Before you decide whether you like the current share price, check how secunet Security Networks scores on these 3 valuation metrics.

But remember: secunet Security Networks may not be the best stock to buy. So take a look at this free a list of interesting companies that have seen past earnings growth (and forecasts for further growth).

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

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This Simply Wall St article is for general information purposes only. Our commentary is based solely on historical data and analyst forecasts, and is based on an objective methodology. 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 your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.