Paradise (KRX:034230) shareholders are up 8.3% this past week, but still in the red over the last three years

Paradise Co., Ltd. (KRX:034230) shareholders should be happy to see the share price up 13% in the last month. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 32% in the last three years, significantly under-performing the market.

While the stock has risen 8.3% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for Paradise

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.

Paradise became profitable within the last five years. We would usually expect to see the share price rise as a result. So given the share price is down it's worth checking some other metrics too.

With a rather small yield of just 0.9% we doubt that the stock's share price is based on its dividend. Revenue is actually up 38% over the three years, so the share price drop doesn't seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching Paradise more closely, as sometimes stocks fall unfairly. This could present 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).

Paradise is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Paradise stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

We regret to report that Paradise shareholders are down 7.2% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 0.4%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Case in point: We've spotted 1 warning sign for Paradise you should be aware of.

We will like Paradise better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 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.