The River Eletec (TYO:6666) Share Price Is Up 347% And Shareholders Are Delighted

Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. Don't believe it? Then look at the River Eletec Corporation (TYO:6666) share price. It's 347% higher than it was five years ago. And this is just one example of the epic gains achieved by some long term investors. On the other hand, the stock price has retraced 5.5% in the last week. But note that the broader market is down 1.6% since last week, and this may have impacted River Eletec's share price.

See our latest analysis for River Eletec

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 the five years of share price growth, River Eletec moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

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

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

What about the Total Shareholder Return (TSR)?

We've already covered River Eletec's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. River Eletec's TSR of 351% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's good to see that River Eletec has rewarded shareholders with a total shareholder return of 208% in the last twelve months. That gain is better than the annual TSR over five years, which is 35%. 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. It's always interesting to track share price performance over the longer term. But to understand River Eletec better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with River Eletec , and understanding them should be part of your investment process.

But note: River Eletec 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 JP exchanges.

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This article by Simply Wall St is general in nature. 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.
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