The one-year shareholder returns and company earnings persist lower as Huvitz (KOSDAQ:065510) stock falls a further 12% in past week

It's easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in Huvitz Co., Ltd. (KOSDAQ:065510) have tasted that bitter downside in the last year, as the share price dropped 49%. That's well below the market decline of 8.2%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 20% in three years. And the share price decline continued over the last week, dropping some 12%.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

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.

Unfortunately Huvitz reported an EPS drop of 27% for the last year. The share price decline of 49% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders more nervous about the business. The P/E ratio of 8.97 also points to the negative market sentiment.

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

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

A Different Perspective

We regret to report that Huvitz shareholders are down 48% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 8.2%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 0.7% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. For example, we've discovered 4 warning signs for Huvitz (1 is potentially serious!) that you should be aware of before investing here.

We will like Huvitz better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 South Korean exchanges.

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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.