Asahi Intelligence Service (TSE:9799) jumps 11% this week, though earnings growth is still tracking behind three-year shareholder returns
The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But in contrast you can make much more than 100% if the company does well. For instance the Asahi Intelligence Service Co., Ltd. (TSE:9799) share price is 117% higher than it was three years ago. That sort of return is as solid as granite. On top of that, the share price is up 19% in about a quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report.
Since the stock has added JP¥1.9b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 three years of share price growth, Asahi Intelligence Service achieved compound earnings per share growth of 13% per year. In comparison, the 29% per year gain in the share price outpaces the EPS growth. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. That's not necessarily surprising considering the three-year track record of earnings growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It might be well worthwhile taking a look at our free report on Asahi Intelligence Service's earnings, revenue and cash flow.
What About The Total Shareholder Return (TSR)?
We've already covered Asahi Intelligence Service'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. Dividends have been really beneficial for Asahi Intelligence Service shareholders, and that cash payout contributed to why its TSR of 142%, over the last 3 years, is better than the share price return.
A Different Perspective
It's nice to see that Asahi Intelligence Service shareholders have received a total shareholder return of 51% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 19% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Is Asahi Intelligence Service cheap compared to other companies? These 3 valuation measures might help you decide.
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.