The three-year shareholder returns and company earnings persist lower as Duksan Hi MetalLtd (KOSDAQ:077360) stock falls a further 10% in past week

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Duksan Hi Metal Co.,Ltd (KOSDAQ:077360) shareholders know that all too well, since the share price is down considerably over three years. So they might be feeling emotional about the 55% share price collapse, in that time. And over the last year the share price fell 51%, so we doubt many shareholders are delighted. Shareholders have had an even rougher run lately, with the share price down 23% in the last 90 days.

Since Duksan Hi MetalLtd has shed ₩19b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Duksan Hi MetalLtd

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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, Duksan Hi MetalLtd moved from a loss to profitability. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.

Revenue is actually up 24% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Duksan Hi MetalLtd further; while we may be missing something on this analysis, there might also be an opportunity.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We know that Duksan Hi MetalLtd has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Duksan Hi MetalLtd will earn in the future (free profit forecasts).

A Different Perspective

While the broader market lost about 3.9% in the twelve months, Duksan Hi MetalLtd shareholders did even worse, losing 51%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 1.9% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. For instance, we've identified 2 warning signs for Duksan Hi MetalLtd (1 is a bit unpleasant) that you should be aware of.

But note: Duksan Hi MetalLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.