A Look At Shinsegae Engineering & Construction's (KRX:034300) Share Price Returns

Shinsegae Engineering & Construction Inc. (KRX:034300) shareholders should be happy to see the share price up 30% in the last quarter. But if you look at the last five years the returns have not been good. You would have done a lot better buying an index fund, since the stock has dropped 35% in that half decade.

View our latest analysis for Shinsegae Engineering & Construction

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 five years over which the share price declined, Shinsegae Engineering & Construction's earnings per share (EPS) dropped by 7.7% each year. This change in EPS is reasonably close to the 8% average annual decrease in the share price. This suggests that market participants have not changed their view of the company all that much. So it's fair to say the share price has been responding to changes in EPS.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

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

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Shinsegae Engineering & Construction's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Shinsegae Engineering & Construction shareholders, and that cash payout explains why its total shareholder loss of 28%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

Shinsegae Engineering & Construction shareholders gained a total return of 3.0% during the year. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 5% per year, over five years. So this might be a sign the business has turned its fortunes around. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Shinsegae Engineering & Construction (at least 1 which is potentially serious) , and understanding them should be part of your investment process.

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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