Investors three-year losses continue as Studio Dragon (KOSDAQ:253450) dips a further 8.4% this week, earnings continue to decline

While not a mind-blowing move, it is good to see that the Studio Dragon Corporation (KOSDAQ:253450) share price has gained 12% in the last three months. Meanwhile over the last three years the stock has dropped hard. Tragically, the share price declined 58% in that time. So it's good to see it climbing back up. Perhaps the company has turned over a new leaf.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

See our latest analysis for Studio Dragon

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 three years that the share price fell, Studio Dragon's earnings per share (EPS) dropped by 3.8% each year. This reduction in EPS is slower than the 25% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

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

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

A Different Perspective

Studio Dragon shareholders are down 29% for the year, but the market itself is up 5.9%. 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 8% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Studio Dragon better, we need to consider many other factors. For example, we've discovered 1 warning sign for Studio Dragon that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on South Korean exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.