Daewon Cable (KRX:006340) delivers shareholders solid 31% CAGR over 5 years, surging 15% in the last week alone

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But when you pick a company that is really flourishing, you can make more than 100%. For instance, the price of Daewon Cable. Co., Ltd. (KRX:006340) stock is up an impressive 281% over the last five years. On top of that, the share price is up 25% in about a quarter. But this could be related to the strong market, which is up 30% in the last three months.

Since the stock has added ₩37b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

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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 half decade, Daewon Cable became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Daewon Cable share price is up 203% in the last three years. Meanwhile, EPS is up 28% per year. This EPS growth is lower than the 45% average annual increase in the share price over three years. So it's fair to assume the market has a higher opinion of the business than it did three years ago.

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

It might be well worthwhile taking a look at our free report on Daewon Cable's earnings, revenue and cash flow.

A Different Perspective

Daewon Cable shareholders gained a total return of 35% during the year. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 31% over half a decade This suggests the company might be improving over time. Before forming an opinion on Daewon Cable you might want to consider these 3 valuation metrics.

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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.