The 69% return delivered to PeptiDream's (TSE:4587) shareholders actually lagged YoY earnings growth

Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. To wit, the PeptiDream Inc. (TSE:4587) share price is 69% higher than it was a year ago, much better than the market return of around 16% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! In contrast, the longer term returns are negative, since the share price is 24% lower than it was three years ago.

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

View our latest analysis for PeptiDream

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

PeptiDream was able to grow EPS by 173% in the last twelve months. This EPS growth is significantly higher than the 69% increase in the share price. So it seems like the market has cooled on PeptiDream, despite the growth. Interesting.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that PeptiDream has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling PeptiDream stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that PeptiDream shareholders have received a total shareholder return of 69% over one year. There's no doubt those recent returns are much better than the TSR loss of 8% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. 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. For example, we've discovered 3 warning signs for PeptiDream (2 are potentially serious!) that you should be aware of before investing here.

But note: PeptiDream 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.