Imagine Holding SK ChemicalsLtd (KRX:285130) Shares While The Price Zoomed 499% Higher

SK Chemicals Co.,Ltd. (KRX:285130) shareholders have seen the share price descend 13% over the month. But that cannot eclipse the spectacular share price rise we've seen over the last twelve months. In fact, it is up 499% in that time. Arguably, the recent fall is to be expected after such a strong rise. The real question is whether the fundamental business performance can justify the strong increase over the long term.

View our latest analysis for SK ChemicalsLtd

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 the last year SK ChemicalsLtd grew its earnings per share, moving from a loss to a profit.

The company was close to break-even last year, so earnings per share of ₩5,006 isn't particularly stand out. But judging by the share price, the market is very pleased with the milestone of reaching profitability. Inflection points like this can be a great time to take a closer look at a company.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that SK ChemicalsLtd 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?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, SK ChemicalsLtd's TSR for the last year was 502%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that SK ChemicalsLtd shareholders have gained 502% (in total) over the last year. That's including the dividend. That's better than the annualized TSR of 52% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with 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. Take risks, for example - SK ChemicalsLtd has 2 warning signs we think you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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