Those who invested in Kansai Electric Power Company (TSE:9503) three years ago are up 70%

The last three months have been tough on The Kansai Electric Power Company, Incorporated (TSE:9503) shareholders, who have seen the share price decline a rather worrying 35%. But that doesn't change the fact that the returns over the last three years have been pleasing. After all, the share price is up a market-beating 55% in that time.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

Check out our latest analysis for Kansai Electric Power Company

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During three years of share price growth, Kansai Electric Power Company achieved compound earnings per share growth of 48% per year. The average annual share price increase of 16% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 5.12.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how Kansai Electric Power Company has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Kansai Electric Power Company stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Kansai Electric Power Company's TSR for the last 3 years was 70%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

While the broader market gained around 14% in the last year, Kansai Electric Power Company shareholders lost 11% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 11% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Kansai Electric Power Company better, we need to consider many other factors. Case in point: We've spotted 5 warning signs for Kansai Electric Power Company you should be aware of, and 2 of them are concerning.

Of course Kansai Electric Power Company may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.