JMDC (TSE:4483) stock performs better than its underlying earnings growth over last five years

It hasn't been the best quarter for JMDC Inc. (TSE:4483) shareholders, since the share price has fallen 26% in that time. But the silver lining is the stock is up over five years. However we are not very impressed because the share price is only up 52%, less than the market return of 129%. While the returns over the last 5 years have been good, we do feel sorry for those shareholders who haven't held shares that long, because the share price is down 47% in the last three years.

Since the stock has added JP¥8.1b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for JMDC

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 five years of share price growth, JMDC achieved compound earnings per share (EPS) growth of 17% per year. This EPS growth is higher than the 9% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

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

A Different Perspective

JMDC shareholders are down 17% for the year (even including dividends), but the market itself is up 2.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 9%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand JMDC better, we need to consider many other factors. For instance, we've identified 2 warning signs for JMDC that you should be aware of.

But note: JMDC may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.