Samwonsteel (KRX:023000) Share Prices Have Dropped 30% In The Last Five Years

While not a mind-blowing move, it is good to see that the Samwonsteel Co., Ltd. (KRX:023000) share price has gained 13% in the last three months. But if you look at the last five years the returns have not been good. You would have done a lot better buying an index fund, since the stock has dropped 30% in that half decade.

Check out our latest analysis for Samwonsteel

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the five years over which the share price declined, Samwonsteel's earnings per share (EPS) dropped by 10% each year. The share price decline of 7% per year isn't as bad as the EPS decline. So the market may previously have expected a drop, or else it expects the situation will improve.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

This free interactive report on Samwonsteel's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What about the Total Shareholder Return (TSR)?

We've already covered Samwonsteel'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 Samwonsteel's TSR, which was a 16% drop over the last 5 years, was not as bad as the share price return.

A Different Perspective

Investors in Samwonsteel had a tough year, with a total loss of 11%, against a market gain of about 32%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Samwonsteel better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Samwonsteel (of which 1 can't be ignored!) you should know about.

Of course Samwonsteel may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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