Investors Who Bought Kukje Pharma (KRX:002720) Shares Five Years Ago Are Now Up 227%

It hasn't been the best quarter for Kukje Pharma Co., Ltd. (KRX:002720) shareholders, since the share price has fallen 20% in that time. But in stark contrast, the returns over the last half decade have impressed. It's fair to say most would be happy with 227% the gain in that time. So while it's never fun to see a share price fall, it's important to look at a longer time horizon. Only time will tell if there is still too much optimism currently reflected in the share price.

Check out our latest analysis for Kukje Pharma

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 half decade, Kukje Pharma became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Kukje Pharma share price is up 144% in the last three years. Meanwhile, EPS is up 34% per year. That makes EPS very close to the 35% share price growth, each year, over the same period. That suggests that the market sentiment around the company hasn't changed much over that time. There's a strong correlation between the share price and EPS.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Kukje Pharma's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Kukje Pharma's TSR of 229% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's nice to see that Kukje Pharma shareholders have received a total shareholder return of 136% over the last year. That gain is better than the annual TSR over five years, which is 27%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Kukje Pharma has 2 warning signs we think you should be aware of.

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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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