Those who invested in Samsung BiologicsLtd (KRX:207940) five years ago are up 50%

If you buy and hold a stock for many years, you'd hope to be making a profit. Furthermore, you'd generally like to see the share price rise faster than the market. But Samsung Biologics Co.,Ltd. (KRX:207940) has fallen short of that second goal, with a share price rise of 49% over five years, which is below the market return. Unfortunately the share price is down 1.5% in the last year.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

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To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During five years of share price growth, Samsung BiologicsLtd achieved compound earnings per share (EPS) growth of 28% per year. The EPS growth is more impressive than the yearly share price gain of 8% over the same period. So it seems the market isn't so enthusiastic about the stock these days. Having said that, the market is still optimistic, given the P/E ratio of 56.46.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Samsung BiologicsLtd has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Samsung BiologicsLtd's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Samsung BiologicsLtd shareholders are down 1.5% for the year, but the market itself is up 38%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 8% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Is Samsung BiologicsLtd cheap compared to other companies? These 3 valuation measures might help you decide.

We will like Samsung BiologicsLtd better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider 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.