Should Iwatsuka Confectionery (TYO:2221) Be Disappointed With Their 38% Profit?

We believe investing is smart because history shows that stock markets go higher in the long term. But not every stock you buy will perform as well as the overall market. Over the last year the Iwatsuka Confectionery Co., Ltd. (TYO:2221) share price is up 38%, but that's less than the broader market return. On the other hand, longer term shareholders have had a tougher run, with the stock falling 17% in three years.

See our latest analysis for Iwatsuka Confectionery

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year Iwatsuka Confectionery grew its earnings per share (EPS) by 19%. This EPS growth is significantly lower than the 38% increase in the share price. This indicates that the market is now more optimistic about the stock.

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

Iwatsuka Confectionery shareholders gained a total return of 39% during the year. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 1.6% per year, over five years. So this might be a sign the business has turned its fortunes around. Before forming an opinion on Iwatsuka Confectionery you might want to consider these 3 valuation metrics.

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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