Update: Hirose Tusyo (TYO:7185) Stock Gained 21% In The Last Year

We believe investing is smart because history shows that stock markets go higher in the long term. But if when you choose to buy stocks, some of them will be below average performers. Over the last year the Hirose Tusyo Inc. (TYO:7185) share price is up 21%, but that's less than the broader market return. However, the stock hasn't done so well in the longer term, with the stock only up 12% in three years.

View our latest analysis for Hirose Tusyo

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last year Hirose Tusyo grew its earnings per share (EPS) by 57%. This EPS growth is significantly higher than the 21% increase in the share price. Therefore, it seems the market isn't as excited about Hirose Tusyo as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 5.66.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Hirose Tusyo the TSR over the last year was 24%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Hirose Tusyo shareholders are up 24% for the year (even including dividends). It's always nice to make money but this return falls short of the market return which was about 30% for the year. On the bright side that gain is actually better than the average return of 6% over the last three years, implying that the company is doing better recently. If the share price is up as a result of improved business performance, then this kind of improvement may be sustained. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 2 warning signs we've spotted with Hirose Tusyo .

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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