Shikoku Electric Power Company's (TSE:9507) five-year earnings growth trails the respectable shareholder returns

The main point of investing for the long term is to make money. But more than that, you probably want to see it rise more than the market average. But Shikoku Electric Power Company, Incorporated (TSE:9507) has fallen short of that second goal, with a share price rise of 64% over five years, which is below the market return. Meanwhile, the last twelve months saw the share price rise 4.5%.

The past week has proven to be lucrative for Shikoku Electric Power Company investors, so let's see if fundamentals drove the company's five-year performance.

See our latest analysis for Shikoku Electric Power Company

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

During the five years of share price growth, Shikoku Electric Power Company moved from a loss to profitability. That's generally thought to be a genuine positive, so investors may expect to see an increasing share price.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that Shikoku Electric Power Company has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Shikoku Electric Power Company's financial health with this free 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 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 Shikoku Electric Power Company, it has a TSR of 87% for the last 5 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

It's good to see that Shikoku Electric Power Company has rewarded shareholders with a total shareholder return of 7.5% in the last twelve months. Of course, that includes the dividend. However, that falls short of the 13% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. It's always interesting to track share price performance over the longer term. But to understand Shikoku Electric Power Company better, we need to consider many other factors. For instance, we've identified 3 warning signs for Shikoku Electric Power Company (2 can't be ignored) that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.