The one-year returns for GnCenergy's (KOSDAQ:119850) shareholders have been respectable, yet its earnings growth was even better

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But if you pick the right individual stocks, you could make more than that. To wit, the GnCenergy Co., Ltd (KOSDAQ:119850) share price is 66% higher than it was a year ago, much better than the market return of around 3.1% (not including dividends) in the same period. That's a solid performance by our standards! It is also impressive that the stock is up 32% over three years, adding to the sense that it is a real winner.

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

Check out our latest analysis for GnCenergy

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 last year GnCenergy grew its earnings per share (EPS) by 333%. This EPS growth is significantly higher than the 66% increase in the share price. Therefore, it seems the market isn't as excited about GnCenergy as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 3.51.

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

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

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for GnCenergy the TSR over the last 1 year was 69%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that GnCenergy shareholders have received a total shareholder return of 69% over the last year. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 11% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 risks, for instance. Every company has them, and we've spotted 2 warning signs for GnCenergy you should know about.

Of course GnCenergy may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.