NoulLtd (KOSDAQ:376930) pulls back 13% this week, but still delivers shareholders 1.2% return over 1 year

Investors can approximate the average 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 Noul Co.,Ltd. (KOSDAQ:376930) have tasted that bitter downside in the last year, as the share price dropped 13%. That's disappointing when you consider the market returned 4.1%. NoulLtd may have better days ahead, of course; we've only looked at a one year period. It's down 16% in about a month.

If the past week is anything to go by, investor sentiment for NoulLtd isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for NoulLtd

Because NoulLtd made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

NoulLtd grew its revenue by 151% over the last year. That's a strong result which is better than most other loss making companies. Given the revenue growth, the share price drop of 13% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between NoulLtd's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. NoulLtd hasn't been paying dividends, but its TSR of 1.2% exceeds its share price return of -13%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

NoulLtd shareholders have gained 1.2% for the year. While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 4.1%. The last three months haven't been great for shareholder returns, since the share price has trailed the market by 5.7% in the last three months. But a weak quarter certainly doesn't diminish the longer-term achievements of the business. 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 - NoulLtd has 6 warning signs (and 3 which don't sit too well with us) we think you should know about.

We will like NoulLtd 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.

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