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Can You Imagine How SecureWorks's (NASDAQ:SCWX) Shareholders Feel About The 47% Share Price Increase?

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You can receive the average market return by buying a low-cost index fund. But you can make superior returns by picking better-than average stocks. For example, the SecureWorks Corp. (NASDAQ:SCWX) share price is up 47% in the last three years, slightly above the market return. The bad news is that the share price seems to lack positive momentum recently, since it has dropped 3.2% in the last year.

Check out our latest analysis for SecureWorks

Because SecureWorks made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 SecureWorks has grown its revenue at 8.9% annually. That's pretty nice growth. The share price gain of 14% per year shows that the market is paying attention to this growth. Of course, valuation is quite sensitive to the rate of growth. Keep in mind that the strength of the balance sheet impacts the options open to the company.

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

NasdaqGS:SCWX Income Statement, January 14th 2020
NasdaqGS:SCWX Income Statement, January 14th 2020

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

A Different Perspective

SecureWorks shareholders are down 3.2% for the year, but the broader market is up 28%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Fortunately the longer term story is brighter, with total returns averaging about 14% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. It's always interesting to track share price performance over the longer term. But to understand SecureWorks better, we need to consider many other factors. For example, we've discovered 2 warning signs for SecureWorks 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.