Is TCC Steel's (KRX:002710) Share Price Gain Of 196% Well Earned?

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But if you buy shares in a really great company, you can more than double your money. To wit, the TCC Steel Corp. (KRX:002710) share price has flown 196% in the last three years. How nice for those who held the stock! It's also good to see the share price up 54% over the last quarter.

View our latest analysis for TCC Steel

Given that TCC Steel only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

Over the last three years TCC Steel has grown its revenue at 4.8% annually. Considering the company is losing money, we think that rate of revenue growth is uninspiring. In contrast, the stock has popped 44% per year in that time - an impressive result. Shareholders should be pretty happy with that, although interested investors might want to examine the financial data more closely to see if the gains are really justified. It may be that the market is pretty optimistic about TCC Steel if you look to the bottom line.

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

This free interactive report on TCC Steel's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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 TCC Steel, it has a TSR of 214% for the last 3 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

We're pleased to report that TCC Steel shareholders have received a total shareholder return of 100% over one year. And that does include the dividend. That's better than the annualised return of 23% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand TCC Steel better, we need to consider many other factors. For example, we've discovered 4 warning signs for TCC Steel (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

We will like TCC Steel 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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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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