Positive earnings growth over the past three years hasn’t been enough to provide Synaptics (NASDAQ:SYNA) shareholders with a favorable return

Synaptics Incorporated (NASDAQ:SYNA) shareholders may be pleased to see the share price is up 14% in the last month. But only the short-sighted could ignore the staggering decline in three years. That means the share price shot up 71% in that time. Therefore, we are relieved to see a slight uptick among long-term holders. You have to think about whether the business has really changed.

Although last week was more confident for shareholders, they are still in the red for the last three years, so let’s see if the underlying business is responsible for the decline.

Check out our latest analysis for Synaptics

To quote Buffett: “Ships will sail around the world, but the Flat Earth Society will thrive.” There will continue to be large discrepancies between price and value in the market…” A way to examine how market sentiment is changing over time What has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

In five years of rising share prices, Synaptics managed to transition from a loss to profitability. Normally we assume that this will cause the share price to rise. In view of the fallen share price, it is worth checking some other key figures.

The 18% annual revenue decline seems to make people think that Synaptics is shrinking. Because if revenues continue to fall, it could be difficult to achieve profit growth in the future.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

We know that Synaptics has been improving its bottom line recently, but what does the future hold? Therefore, we recommend you take a look at this free Report with consensus forecasts

A different perspective

Synaptics investors had a difficult year, with a total loss of 21% versus a market gain of about 33%. Even the share prices of good stocks fall sometimes, but we want to see improvements in a company’s fundamental metrics before getting too interested. Longer-term investors wouldn’t be as upset since they would have earned 7% each year over five years. It could be that the recent sell-off represents an opportunity, so it might be worth checking the fundamentals for signs of a long-term growth trend. It is always interesting to follow the development of the share price over the longer term. But to better understand Synaptics, we need to consider many other factors. For example, we identified 2 warning signs for Synaptics (1 is a bit uncomfortable) that you should be aware of.

If you’d prefer to check out another company – one with potentially better financials – don’t miss out free List of companies that have proven they can grow their earnings.

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

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term focused analysis based on fundamental data. Note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.