Strong week for Universal Entertainment (TSE:6425) shareholders doesn't alleviate pain of five-year loss

This week we saw the Universal Entertainment Corporation (TSE:6425) share price climb by 11%. But that is little comfort to those holding over the last half decade, sitting on a big loss. The share price has failed to impress anyone , down a sizable 69% during that time. So we're hesitant to put much weight behind the short term increase. We'd err towards caution given the long term under-performance.

While the last five years has been tough for Universal Entertainment shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

See our latest analysis for Universal Entertainment

Universal Entertainment 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last half decade, Universal Entertainment saw its revenue increase by 11% per year. That's a pretty good rate for a long time period. The share price, meanwhile, has fallen 11% compounded, over five years. That suggests the market is disappointed with the current growth rate. A pessimistic market can create opportunities.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

This free interactive report on Universal Entertainment's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Universal Entertainment shareholders are down 49% for the year (even including dividends), but the market itself is up 8.8%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. 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 Universal Entertainment better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Universal Entertainment (including 1 which is significant) .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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