Further weakness as WithSecure Oyj (HEL:WITH) drops 15% this week, taking three-year losses to 56%

Simply Wall St · 10/15 03:00

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term WithSecure Oyj (HEL:WITH) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 82% in that time. More recently, the share price has dropped a further 17% in a month. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

After losing 15% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for WithSecure Oyj

WithSecure Oyj wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over the last three years, WithSecure Oyj's revenue dropped 1.9% per year. That's not what investors generally want to see. Having said that the 22% annualized share price decline highlights the risk of investing in unprofitable companies. We're generally averse to companies with declining revenues, but we're not alone in that. There's no more than a snowball's chance in hell that share price will head back to its old highs, in the short term.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
HLSE:WITH Earnings and Revenue Growth October 15th 2024

This free interactive report on WithSecure Oyj's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

We've already covered WithSecure Oyj's share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Dividends have been really beneficial for WithSecure Oyj shareholders, and that cash payout explains why its total shareholder loss of 56%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

WithSecure Oyj shareholders are down 11% for the year, but the market itself is up 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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