Reflecting on Kolon's (KRX:002020) Share Price Returns Over The Last Five Years

Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. For example, after five long years the Kolon Corporation (KRX:002020) share price is a whole 71% lower. We certainly feel for shareholders who bought near the top. And the share price decline continued over the last week, dropping some 5.5%. However, this move may have been influenced by the broader market, which fell 4.2% in that time.

See our latest analysis for Kolon

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Looking back five years, both Kolon's share price and EPS declined; the latter at a rate of 9.1% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 22% per year, over the period. This implies that the market was previously too optimistic about the stock. The less favorable sentiment is reflected in its current P/E ratio of 3.26.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Kolon, it has a TSR of -68% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

Kolon shareholders are up 32% for the year (even including dividends). But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 11% per year, over five years. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Kolon better, we need to consider many other factors. Take risks, for example - Kolon has 1 warning sign we think you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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