Chiyoda (TSE:6366) shareholders are still up 38% over 5 years despite pulling back 11% in the past week

Chiyoda Corporation (TSE:6366) shareholders might be concerned after seeing the share price drop 11% in the last week. But at least the stock is up over the last five years. In that time, it is up 38%, which isn't bad, but is below the market return of 95%. Unfortunately not all shareholders will have held it for the long term, so spare a thought for those caught in the 20% decline over the last twelve months.

Although Chiyoda has shed JP¥9.8b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

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Chiyoda wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 5 years Chiyoda saw its revenue grow at 9.8% per year. That's a fairly respectable growth rate. While the share price has gained 7% per year for five years, that's hardly amazing considering the market also rose. You could even argue that the share price was over optimistic, previously.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time .

A Different Perspective

While the broader market lost about 3.9% in the twelve months, Chiyoda shareholders did even worse, losing 20%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 7% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Chiyoda better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Chiyoda , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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