Stock Analysis

The Shigematsu Works (TYO:7980) Share Price Is Up 62% And Shareholders Are Holding On

TSE:7980
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If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. To wit, the Shigematsu Works Co., Ltd. (TYO:7980) share price is 62% higher than it was a year ago, much better than the market return of around 3.6% (not including dividends) in the same period. So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 4.5% higher than it was three years ago.

See our latest analysis for Shigematsu Works

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 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 the last year Shigematsu Works grew its earnings per share (EPS) by 280%. It's fair to say that the share price gain of 62% did not keep pace with the EPS growth. So it seems like the market has cooled on Shigematsu Works, despite the growth. Interesting.

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

earnings-per-share-growth
JASDAQ:7980 Earnings Per Share Growth December 17th 2020

This free interactive report on Shigematsu Works' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Shigematsu Works shareholders have received a total shareholder return of 63% over the last year. That's better than the annualised return of 10% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Shigematsu Works better, we need to consider many other factors. For instance, we've identified 2 warning signs for Shigematsu Works that you should be aware of.

We will like Shigematsu Works 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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