Namkwang Engineering & Construction's (KRX:001260) earnings trajectory could turn positive as the stock rallies 11% this past week

Namkwang Engineering & Construction Co., Ltd. (KRX:001260) shareholders should be happy to see the share price up 29% in the last quarter. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 30% in the last three years, falling well short of the market return.

The recent uptick of 11% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for Namkwang Engineering & Construction

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 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).

During the three years that the share price fell, Namkwang Engineering & Construction's earnings per share (EPS) dropped by 14% each year. This fall in the EPS is worse than the 11% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It might be well worthwhile taking a look at our free report on Namkwang Engineering & Construction's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Namkwang Engineering & Construction has rewarded shareholders with a total shareholder return of 5.5% in the last twelve months. Notably the five-year annualised TSR loss of 5% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Take risks, for example - Namkwang Engineering & Construction has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

We will like Namkwang Engineering & Construction better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.