Can You Imagine How Kwang Dong Pharmaceutical's (KRX:009290) Shareholders Feel About The 54% Share Price Increase?

Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Kwang Dong Pharmaceutical Co., Ltd. (KRX:009290) share price is up 54% in the last year, clearly besting the market return of around 30% (not including dividends). That's a solid performance by our standards! However, the longer term returns haven't been so impressive, with the stock up just 17% in the last three years.

View our latest analysis for Kwang Dong Pharmaceutical

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

Kwang Dong Pharmaceutical was able to grow EPS by 143% in the last twelve months. It's fair to say that the share price gain of 54% did not keep pace with the EPS growth. So it seems like the market has cooled on Kwang Dong Pharmaceutical, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 7.53.

You can see below how EPS has changed over time (discover 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.

A Different Perspective

It's nice to see that Kwang Dong Pharmaceutical shareholders have received a total shareholder return of 56% over the last year. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 0.2% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 - Kwang Dong Pharmaceutical has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

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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