Seiwa Chuo Holdings (TYO:7531) Share Prices Have Dropped 59% In The Last Three Years

Investing in stocks inevitably means buying into some companies that perform poorly. Long term Seiwa Chuo Holdings Corporation (TYO:7531) shareholders know that all too well, since the share price is down considerably over three years. So they might be feeling emotional about the 59% share price collapse, in that time. The more recent news is of little comfort, with the share price down 32% in a year.

See our latest analysis for Seiwa Chuo Holdings

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).

Seiwa Chuo Holdings saw its EPS decline at a compound rate of 47% per year, over the last three years. This fall in the EPS is worse than the 26% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. With a P/E ratio of 74.86, it's fair to say the market sees a brighter future for the business.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

Investors in Seiwa Chuo Holdings had a tough year, with a total loss of 31% (including dividends), against a market gain of about 5.3%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Seiwa Chuo Holdings better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Seiwa Chuo Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.

We will like Seiwa Chuo Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies 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 JP exchanges.

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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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