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Odakyu Electric Railway (TSE:9007) shareholders have endured a 33% loss from investing in the stock five years ago

Simply Wall St · 07/22 21:25

For many, the main point of investing is to generate higher returns than the overall market. But the main game is to find enough winners to more than offset the losers So we wouldn't blame long term Odakyu Electric Railway Co., Ltd. (TSE:9007) shareholders for doubting their decision to hold, with the stock down 37% over a half decade.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

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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).

While the share price declined over five years, Odakyu Electric Railway actually managed to increase EPS by an average of 22% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.

Due to the lack of correlation between the EPS growth and the falling share price, it's worth taking a look at other metrics to try to understand the share price movement.

The revenue decline of 1.7% isn't too bad. But if the market expected durable top line growth, then that could explain the share price weakness.

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:9007 Earnings and Revenue Growth July 22nd 2025

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

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Odakyu Electric Railway the TSR over the last 5 years was -33%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Odakyu Electric Railway has rewarded shareholders with a total shareholder return of 6.7% in the last twelve months. And that does include the dividend. Notably the five-year annualised TSR loss of 6% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Odakyu Electric Railway better, we need to consider many other factors. Even so, be aware that Odakyu Electric Railway is showing 5 warning signs in our investment analysis , and 2 of those don't sit too well with us...

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