Digimarc Corporation (NASDAQ:DMRC) shareholders will doubtless be very grateful to see the share price up 30% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 12% in the last three years, falling well short of the market return.

On a more encouraging note the company has added US$67m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

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. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years, Digimarc saw its revenue grow by 14% per year, compound. That's a pretty good rate of top-line growth. Shareholders have seen the share price fall at 4% per year, for three years. This implies the market had higher expectations of Digimarc. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Digimarc shareholders gained a total return of 6.2% during the year. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 0.8% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Digimarc you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.