Can You Imagine How E-MART's (KRX:139480) Shareholders Feel About The 56% Share Price Increase?

A diverse portfolio of stocks will always have winners and losers. But if you're going to beat the market overall, you need to have individual stocks that outperform. E-MART Inc. (KRX:139480) has done well over the last year, with the stock price up 56% beating the market return of 50% (not including dividends). Zooming out, the stock is actually down 38% in the last three years.

Check out our latest analysis for E-MART

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 last year E-MART grew its earnings per share (EPS) by 297%. It's fair to say that the share price gain of 56% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about E-MART as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.33.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that E-MART has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, E-MART's TSR for the last year was 58%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

E-MART's TSR for the year was broadly in line with the market average, at 58%. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 2%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. 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 E-MART you should be aware of, and 1 of them is a bit unpleasant.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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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