The total return for Yoshimura Food Holdings K.K (TSE:2884) investors has risen faster than earnings growth over the last three years

It's been a soft week for Yoshimura Food Holdings K.K. (TSE:2884) shares, which are down 11%. But that doesn't change the fact that the returns over the last three years have been very strong. The share price marched upwards over that time, and is now 104% higher than it was. So the recent fall in the share price should be viewed in that context. If the business can perform well for years to come, then the recent drop could be an opportunity.

In light of the stock dropping 11% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.

See our latest analysis for Yoshimura Food Holdings K.K

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 three years of share price growth, Yoshimura Food Holdings K.K achieved compound earnings per share growth of 33% per year. The average annual share price increase of 27% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock.

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

It is of course excellent to see how Yoshimura Food Holdings K.K has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Yoshimura Food Holdings K.K's financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Yoshimura Food Holdings K.K shareholders have received a total shareholder return of 80% over one year. That gain is better than the annual TSR over five years, which is 13%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Yoshimura Food Holdings K.K (of which 2 are a bit unpleasant!) you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com