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If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can significantly boost your returns by picking above-average stocks. For example, the SecureWorks Corp. (NASDAQ:SCWX) share price is up 94% in the last year, clearly besting the market return of around 41% (not including dividends). So that should have shareholders smiling. Looking back further, the stock price is 61% higher than it was three years ago.
Given that SecureWorks 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
SecureWorks actually shrunk its revenue over the last year, with a reduction of 0.3%. Despite the lack of revenue growth, the stock has returned a solid 94% the last twelve months. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling SecureWorks stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We're pleased to report that SecureWorks shareholders have received a total shareholder return of 94% over one year. That gain is better than the annual TSR over five years, which is 8%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. For example, we've discovered 4 warning signs for SecureWorks (1 is a bit concerning!) that you should be aware of before investing here.
Of course SecureWorks 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 US exchanges.
This article by Simply Wall St is general in nature. 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.
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