If You Had Bought Me2on's (KOSDAQ:201490) Shares Three Years Ago You Would Be Down 23%

Many investors define successful investing as beating the market average over the long term. But if you try your hand at stock picking, your risk returning less than the market. Unfortunately, that's been the case for longer term Me2on Co., Ltd. (KOSDAQ:201490) shareholders, since the share price is down 23% in the last three years, falling well short of the market return of around 26%. The silver lining is that the stock is up 4.2% in about a week.

Check out our latest analysis for Me2on

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Although the share price is down over three years, Me2on actually managed to grow EPS by 72% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We note that, in three years, revenue has actually grown at a 43% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating Me2on further; while we may be missing something on this analysis, there might also be an opportunity.

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

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Over the last year Me2on shareholders have received a TSR of 7.3%. Unfortunately this falls short of the market return of around 38%. On the bright side, that's certainly better than the yearly loss of about 7% endured over the last three years, implying that the company is doing better recently. It could well be that the business is stabilizing. Before forming an opinion on Me2on you might want to consider these 3 valuation metrics.

We will like Me2on better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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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