When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. Long term RADCOM Ltd. (NASDAQ:RDCM) shareholders would be well aware of this, since the stock is up 103% in five years. The last week saw the share price soften some 1.5%.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

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To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the last half decade, RADCOM became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that RADCOM 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 RADCOM stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

RADCOM provided a TSR of 9.0% over the year. That's fairly close to the broader market return. We should note here that the five-year TSR is more impressive, at 15% per year. More recently, the share price growth has slowed. But it has to be said the overall picture is one of good long term and short term performance. Arguably that makes RADCOM a stock worth watching. It's always interesting to track share price performance over the longer term. But to understand RADCOM better, we need to consider many other factors. Even so, be aware that RADCOM is showing 1 warning sign in our investment analysis , you should know about...

We will like RADCOM better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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

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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.