Despite the downward trend in earnings at UBE (TSE:4208) the stock grows 3.7%, bringing three-year gains to 37%

It hasn't been the best quarter for UBE Corporation (TSE:4208) shareholders, since the share price has fallen 13% in that time. In contrast the stock is up over the last three years. In that time, it is up 21%, which isn't bad, but not amazing either.

The past week has proven to be lucrative for UBE investors, so let's see if fundamentals drove the company's three-year performance.

See our latest analysis for UBE

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over the last three years, UBE failed to grow earnings per share, which fell 13% (annualized).

Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Given this situation, it makes sense to look at other metrics too.

Interestingly, the dividend has increased over time; so that may have given the share price a boost. It could be that the company is reaching maturity and dividend investors are buying for the yield.

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

We know that UBE has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think UBE will earn in the future (free profit forecasts).

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of UBE, it has a TSR of 37% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

UBE provided a TSR of 9.5% over the last twelve months. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 5% per year over five year. This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand UBE better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for UBE (of which 1 is potentially serious!) you should know about.

We will like UBE better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider 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.