The 100% return delivered to Kyobo SecuritiesLtd's (KRX:030610) shareholders actually lagged YoY earnings growth

The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Kyobo Securities Co.,Ltd. (KRX:030610) share price is up 85% in the last 1 year, clearly besting the market return of around 4.9% (not including dividends). So that should have shareholders smiling. It is also impressive that the stock is up 55% over three years, adding to the sense that it is a real winner.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Kyobo SecuritiesLtd was able to grow EPS by 148% in the last twelve months. This EPS growth is significantly higher than the 85% increase in the share price. So it seems like the market has cooled on Kyobo SecuritiesLtd, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 7.86.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into Kyobo SecuritiesLtd's key metrics by checking this interactive graph of Kyobo SecuritiesLtd's earnings, revenue and cash flow.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Kyobo SecuritiesLtd, it has a TSR of 100% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

We're pleased to report that Kyobo SecuritiesLtd shareholders have received a total shareholder return of 100% over one year. And that does include the dividend. That gain is better than the annual TSR over five years, which is 14%. Therefore it seems like sentiment around the company has been positive lately. 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. Take risks, for example - Kyobo SecuritiesLtd has 3 warning signs (and 1 which is significant) we think you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on South Korean exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.