The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Sajo Industries Company Limited (KRX:007160) share price had more than doubled in just one year - up 175%. On top of that, the share price is up 81% in about a quarter. Unfortunately the longer term returns are not so good, with the stock falling 14% in the last three years.
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.
During the last year Sajo Industries saw its earnings per share (EPS) drop below zero. While some may see this as temporary, we're a skeptical bunch, and so we're a little surprised to see the share price go up. It may be that the company has done well on other metrics.
We doubt the modest 0.3% dividend yield is doing much to support the share price. Sajo Industries' revenue actually dropped 23% over last year. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
If you are thinking of buying or selling Sajo Industries stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We're pleased to report that Sajo Industries shareholders have received a total shareholder return of 177% over one year. That's including the dividend. That certainly beats the loss of about 0.4% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Sajo Industries better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Sajo Industries (of which 2 don't sit too well with us!) you should know about.
Of course Sajo Industries may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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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