Does Paik Kwang Industrial's (KRX:001340) Share Price Gain of 84% Match Its Business Performance?

Paik Kwang Industrial Co., Ltd. (KRX:001340) shareholders might be concerned after seeing the share price drop 12% in the last week. On the bright side the returns have been quite good over the last half decade. After all, the share price is up a market-beating 84% in that time.

View our latest analysis for Paik Kwang Industrial

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 five years of share price growth, Paik Kwang Industrial actually saw its EPS drop 16% per year.

Essentially, it doesn't seem likely that investors are focused on EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

It is not great to see that revenue has dropped by per year over five years. It certainly surprises us that the share price is up, but perhaps a closer examination of the data will yield answers.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at Paik Kwang Industrial's financial health with this free report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Paik Kwang Industrial, it has a TSR of 100% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Paik Kwang Industrial shareholders are up 33% for the year (even including dividends). But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 15% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand Paik Kwang Industrial better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Paik Kwang Industrial (of which 1 doesn't sit too well with us!) you should know about.

We will like Paik Kwang Industrial 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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