Introducing Dong Yang Piston (KRX:092780), A Stock That Climbed 79% In The Last Year

A diverse portfolio of stocks will always have winners and losers. But the goal is to pick stocks that do better than average. Dong Yang Piston Co., Ltd. (KRX:092780) has done well over the last year, with the stock price up 79% beating the market return of 74% (not including dividends). The longer term returns have not been as good, with the stock price only 25% higher than it was three years ago.

View our latest analysis for Dong Yang Piston

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the last year Dong Yang Piston saw its earnings per share (EPS) drop below zero. While some may see this as temporary, we're a skeptical bunch, and so we're a little surprised to see the share price go up. We might get a clue to explain the share price move by looking to other metrics.

We are skeptical of the suggestion that the 2.0% dividend yield would entice buyers to the stock. Unfortunately Dong Yang Piston's fell 8.4% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

If you are thinking of buying or selling Dong Yang Piston stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the market return was 79% in the last year, Dong Yang Piston returned 81% to shareholders. That's not at all bad, but the cherry on top is that it's an improvement on prior returns (since shareholders only made 10% yearly over the last three years). We're certainly happy to see the uptick and we hope the underlying business goes on to justify the improved valuation. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Dong Yang Piston (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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This article by Simply Wall St is general in nature. 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.
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