Update: Hankuk Steel Wire (KOSDAQ:025550) Stock Gained 33% In The Last Three Years

By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, Hankuk Steel Wire Co., Ltd. (KOSDAQ:025550) shareholders have seen the share price rise 33% over three years, well in excess of the market return (20%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 22% in the last year.

See our latest analysis for Hankuk Steel Wire

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Over the last three years, Hankuk Steel Wire failed to grow earnings per share, which fell 6.9% (annualized).

Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Given this situation, it makes sense to look at other metrics too.

We severely doubt anyone is particularly impressed with the modest 2.9% three-year revenue growth rate. So truth be told we can't see an easy explanation for the share price action, but perhaps you can...

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Take a more thorough look at Hankuk Steel Wire's financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We've already covered Hankuk Steel Wire's share price action, but we should also mention its 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. Its history of dividend payouts mean that Hankuk Steel Wire's TSR of 38% over the last 3 years is better than the share price return.

A Different Perspective

Hankuk Steel Wire shareholders gained a total return of 22% during the year. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 3% over half a decade This suggests the company might be improving over time. 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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Hankuk Steel Wire (of which 2 are potentially serious!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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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