Digimarc Corporation (NASDAQ:DMRC) shareholders should be happy to see the share price up 27% in the last month. But over the last half decade, the stock has not performed well. After all, the share price is down 44% in that time, significantly under-performing the market.

While the stock has risen 9.4% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Given that Digimarc didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last half decade, Digimarc saw its revenue increase by 10% per year. That's a fairly respectable growth rate. Shareholders have seen the share price fall at 7% per year, for five years: a poor performance. Those who bought back then clearly believed in stronger growth - and maybe even profits. The lesson is that if you buy shares in a money losing company you could end up losing money.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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

A Different Perspective

While the broader market gained around 25% in the last year, Digimarc shareholders lost 7.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 7% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand Digimarc better, we need to consider many other factors. Take risks, for example - Digimarc has 3 warning signs we think you should be aware of.

Of course Digimarc 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.