As Scatec (OB:SCATC) grows 3.2% this past week, investors may now be noticing the company's five-year earnings growth

Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. For example the Scatec ASA (OB:SCATC) share price dropped 66% over five years. That's not a lot of fun for true believers.

On a more encouraging note the company has added kr509m to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Scatec moved from a loss to profitability. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics might give us a better handle on how its value is changing over time.

In contrast to the share price, revenue has actually increased by 9.3% a year in the five year period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.

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 Scatec has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Scatec stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that Scatec shareholders have received a total shareholder return of 26% over one year. Notably the five-year annualised TSR loss of 10% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Scatec better, we need to consider many other factors. Even so, be aware that Scatec is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

But note: Scatec may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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