The LG Chem (KRX:051910) Share Price Has Gained 205%, So Why Not Pay It Some Attention?

LG Chem, Ltd. (KRX:051910) shareholders have seen the share price descend 13% over the month. But that doesn't detract from the splendid returns of the last year. We're very pleased to report the share price shot up 205% in that time. So we think most shareholders won't be too upset about the recent fall. Only time will tell if there is still too much optimism currently reflected in the share price.

See our latest analysis for LG Chem

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.

LG Chem was able to grow EPS by 19% in the last twelve months. This EPS growth is significantly lower than the 205% increase in the share price. This indicates that the market is now more optimistic about the stock. The fairly generous P/E ratio of 157.08 also points to this optimism.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that LG Chem has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for LG Chem the TSR over the last year was 208%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that LG Chem has rewarded shareholders with a total shareholder return of 208% in the last twelve months. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 22%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand LG Chem better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for LG Chem you should know about.

But note: LG Chem may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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