Hankyu Hanshin REIT (TSE:8977) earnings and shareholder returns have been trending downwards for the last five years, but the stock spikes 10% this past week

While not a mind-blowing move, it is good to see that the Hankyu Hanshin REIT, Inc. (TSE:8977) share price has gained 20% in the last three months. But that doesn't change the fact that the returns over the last five years have been less than pleasing. You would have done a lot better buying an index fund, since the stock has dropped 20% in that half decade.

On a more encouraging note the company has added JP¥9.4b to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.

See our latest analysis for Hankyu Hanshin REIT

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.

Looking back five years, both Hankyu Hanshin REIT's share price and EPS declined; the latter at a rate of 1.4% per year. This reduction in EPS is less than the 4% annual reduction in the share price. So it seems the market was too confident about the business, in the past.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into Hankyu Hanshin REIT's key metrics by checking this interactive graph of Hankyu Hanshin REIT's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Hankyu Hanshin REIT's TSR for the last 5 years was -1.4%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Hankyu Hanshin REIT has rewarded shareholders with a total shareholder return of 8.9% in the last twelve months. And that does include the dividend. Notably the five-year annualised TSR loss of 0.3% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Hankyu Hanshin REIT better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Hankyu Hanshin REIT (at least 2 which don't sit too well with us) , and understanding them should be part of your investment process.

We will like Hankyu Hanshin REIT 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.