The Lotte FoodLtd (KRX:002270) Share Price Has Gained 72% And Shareholders Are Hoping For More

It might be of some concern to shareholders to see the Lotte Food Co.,Ltd. (KRX:002270) share price down 11% in the last month. Looking on the brighter side, the stock is actually up over twelve months. But to be blunt its return of 72% fall short of what you could have got from an index fund (around 119%).

View our latest analysis for Lotte FoodLtd

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

During the last year Lotte FoodLtd grew its earnings per share (EPS) by 87%. This EPS growth is significantly higher than the 72% increase in the share price. Therefore, it seems the market isn't as excited about Lotte FoodLtd as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 4.88.

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 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Lotte FoodLtd, it has a TSR of 78% for the last year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Lotte FoodLtd shareholders are up 78% for the year (even including dividends). But that return falls short of the market. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 7% endured over half a decade. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Lotte FoodLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Lotte FoodLtd (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

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 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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