Does ENERGY&MACHINERY KOREALtd's (KOSDAQ:095190) Share Price Gain of 87% Match Its Business Performance?

One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, ENERGY&MACHINERY KOREA Co.,Ltd. (KOSDAQ:095190) shareholders have seen the share price rise 87% over three years, well in excess of the market return (18%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 38%.

View our latest analysis for ENERGY&MACHINERY KOREALtd

Because ENERGY&MACHINERY KOREALtd made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

ENERGY&MACHINERY KOREALtd actually saw its revenue drop by 9.7% per year over three years. The revenue growth might be lacking but the share price has gained 23% each year in that time. If the company is cutting costs profitability could be on the horizon, but the revenue decline is a prima facie concern.

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

Take a more thorough look at ENERGY&MACHINERY KOREALtd's financial health with this free report on its balance sheet.

A Different Perspective

ENERGY&MACHINERY KOREALtd's TSR for the year was broadly in line with the market average, at 38%. That gain looks pretty satisfying, and it is even better than the five-year TSR of 7% per year. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. It's always interesting to track share price performance over the longer term. But to understand ENERGY&MACHINERY KOREALtd better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for ENERGY&MACHINERY KOREALtd (of which 1 is a bit unpleasant!) you should know about.

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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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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