Investors Who Bought Dongwon Industries (KRX:006040) Shares A Year Ago Are Now Up 29%

On average, over time, stock markets tend to rise higher. This makes investing attractive. But not every stock you buy will perform as well as the overall market. Over the last year the Dongwon Industries Co., Ltd. (KRX:006040) share price is up 29%, but that's less than the broader market return. Zooming out, the stock is actually down 16% in the last three years.

View our latest analysis for Dongwon Industries

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

During the last year Dongwon Industries grew its earnings per share (EPS) by 96%. This EPS growth is significantly higher than the 29% increase in the share price. So it seems like the market has cooled on Dongwon Industries, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 5.77.

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

We know that Dongwon Industries has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Dongwon Industries the TSR over the last year was 32%, 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

Dongwon Industries shareholders are up 32% for the year (even including dividends). But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 0.8% per year over five year. It is possible that returns will improve along with the business fundamentals. 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. Even so, be aware that Dongwon Industries is showing 3 warning signs in our investment analysis , and 1 of those is potentially serious...

We will like Dongwon Industries better if we see some big insider buys. While we wait, check out this free list of growing companies 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 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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