Reflecting on Semyung Electric MachineryLtd's (KOSDAQ:017510) Share Price Returns Over The Last Three Years

Many investors define successful investing as beating the market average over the long term. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Semyung Electric Machinery Co.,Ltd (KOSDAQ:017510) shareholders have had that experience, with the share price dropping 34% in three years, versus a market return of about 28%. It's up 4.2% in the last seven days.

Check out our latest analysis for Semyung Electric MachineryLtd

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 three years that the share price fell, Semyung Electric MachineryLtd's earnings per share (EPS) dropped by 4.8% each year. This reduction in EPS is slower than the 13% annual reduction in the share price. So it seems the market was too confident about the business, in the past.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Semyung Electric MachineryLtd's key metrics by checking this interactive graph of Semyung Electric MachineryLtd's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Semyung Electric MachineryLtd's total shareholder return (TSR) and its share price change, which we've covered above. 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. Its history of dividend payouts mean that Semyung Electric MachineryLtd's TSR, which was a 31% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

Investors in Semyung Electric MachineryLtd had a tough year, with a total loss of 7.8%, against a market gain of about 44%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 7%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. To that end, you should learn about the 3 warning signs we've spotted with Semyung Electric MachineryLtd (including 1 which can't be ignored) .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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