Investors in LG Electronics (KRX:066570) have unfortunately lost 31% over the last year

The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in LG Electronics Inc. (KRX:066570) have tasted that bitter downside in the last year, as the share price dropped 32%. That falls noticeably short of the market return of around 13%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 19% in three years.

Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

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 unfortunate twelve months during which the LG Electronics share price fell, it actually saw its earnings per share (EPS) improve by 2.7%. It could be that the share price was previously over-hyped.

It seems quite likely that the market was expecting higher growth from the stock. But other metrics might shed some light on why the share price is down.

Given the yield is quite low, at 1.3%, we doubt the dividend can shed much light on the share price. LG Electronics' revenue is actually up 7.8% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

LG Electronics is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think LG Electronics will earn in the future (free analyst consensus estimates)

A Different Perspective

While the broader market gained around 13% in the last year, LG Electronics shareholders lost 31% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 1.4%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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 - LG Electronics has 2 warning signs we think you should be aware of.

But note: LG Electronics may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.