Did Samsung Securities' (KRX:016360) Share Price Deserve to Gain 11%?

We believe investing is smart because history shows that stock markets go higher in the long term. But if when you choose to buy stocks, some of them will be below average performers. For example, the Samsung Securities Co., Ltd. (KRX:016360), share price is up over the last year, but its gain of 11% trails the market return. In contrast, the longer term returns are negative, since the share price is 7.3% lower than it was three years ago.

View our latest analysis for Samsung Securities

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 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.

Samsung Securities was able to grow EPS by 38% in the last twelve months. It's fair to say that the share price gain of 11% did not keep pace with the EPS growth. So it seems like the market has cooled on Samsung Securities, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 7.67.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Samsung Securities has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Samsung Securities will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Samsung Securities the TSR over the last year was 16%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Samsung Securities shareholders gained a total return of 16% during the year. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 6% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. 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 2 warning signs for Samsung Securities you should be aware of, and 1 of them shouldn't be ignored.

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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