• EN

    • -+ 0.00%
    -+ 0.00%
    -+ 0.00%

    Yomeishu SeizoLtd (TSE:2540) shareholders notch a 48% CAGR over 3 years, yet earnings have been shrinking

    Simply Wall St·12/30/2025 21:18:57
    Listen to the news

    The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the Yomeishu Seizo Co.,Ltd. (TSE:2540) share price has flown 203% in the last three years. That sort of return is as solid as granite. On top of that, the share price is up 39% in about a quarter.

    After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

    We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

    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. 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 three years of share price growth, Yomeishu SeizoLtd actually saw its earnings per share (EPS) drop 13% per year.

    This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

    The modest 0.8% dividend yield is unlikely to be propping up the share price. The revenue drop of 3.0% is as underwhelming as some politicians. The only thing that's clear is there is low correlation between Yomeishu SeizoLtd's share price and its historic fundamental data. Further research may be required!

    You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

    earnings-and-revenue-growth
    TSE:2540 Earnings and Revenue Growth December 30th 2025

    You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

    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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Yomeishu SeizoLtd, it has a TSR of 225% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

    A Different Perspective

    We're pleased to report that Yomeishu SeizoLtd shareholders have received a total shareholder return of 121% over one year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 27% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Yomeishu SeizoLtd is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

    If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

    Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Japanese exchanges.