HANSHIN Engineering & Construction (KRX:004960) Shareholders Have Enjoyed A 32% Share Price Gain

There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But not every stock you buy will perform as well as the overall market. For example, the HANSHIN Engineering & Construction Co., Ltd. (KRX:004960), share price is up over the last year, but its gain of 32% trails the market return. Unfortunately the longer term returns are not so good, with the stock falling 20% in the last three years.

Check out our latest analysis for HANSHIN Engineering & Construction

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 last year, HANSHIN Engineering & Construction actually saw its earnings per share drop 24%.

This means it's unlikely the market is judging the company based on earnings growth. Indeed, when EPS is declining but the share price is up, it often means the market is considering other factors.

We doubt the modest 1.9% dividend yield is doing much to support the share price. Unfortunately HANSHIN Engineering & Construction's fell 4.4% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at HANSHIN Engineering & Construction's financial health with this free report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for HANSHIN Engineering & Construction the TSR over the last year was 35%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

HANSHIN Engineering & Construction shareholders gained a total return of 35% during the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 5% per year over five year. It is possible that returns will improve along with the business fundamentals. 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. Case in point: We've spotted 3 warning signs for HANSHIN Engineering & Construction 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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