Can You Imagine How Hanyang Securities' (KRX:001750) Shareholders Feel About The 79% Share Price Increase?

Diversification is a key tool for dealing with stock price volatility. But if you're going to beat the market overall, you need to have individual stocks that outperform. Hanyang Securities Co. Ltd. (KRX:001750) has done well over the last year, with the stock price up 79% beating the market return of 74% (not including dividends). It is also impressive that the stock is up 34% over three years, adding to the sense that it is a real winner.

Check out our latest analysis for Hanyang Securities

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 last year Hanyang Securities grew its earnings per share (EPS) by 203%. This EPS growth is significantly higher than the 79% increase in the share price. Therefore, it seems the market isn't as excited about Hanyang Securities as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 4.29.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Hanyang Securities' total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Hanyang Securities' TSR of 94% for the year exceeded its share price return, because it has paid dividends.

A Different Perspective

It's good to see that Hanyang Securities has rewarded shareholders with a total shareholder return of 94% in the last twelve months. That's better than the annualised return of 12% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Hanyang Securities (at least 1 which doesn't sit too well with us) , 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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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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