Despite shrinking by ₩12b in the past week, Hanyang Digitech (KOSDAQ:078350) shareholders are still up 71% over 5 years

While Hanyang Digitech Co., Ltd. (KOSDAQ:078350) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 27% in the last quarter. Looking further back, the stock has generated good profits over five years. It has returned a market beating 71% in that time. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 40% drop, in the last year.

Although Hanyang Digitech has shed ₩12b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Check out our latest analysis for Hanyang Digitech

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last half decade, Hanyang Digitech became profitable. That's generally thought to be a genuine positive, so investors may expect to see an increasing share price. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. In fact, the Hanyang Digitech stock price is 53% lower in the last three years. In the same period, EPS is up 17% per year. It would appear there's a real mismatch between the increasing EPS and the share price, which has declined -22% a year for three years.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

A Different Perspective

While the broader market lost about 3.9% in the twelve months, Hanyang Digitech shareholders did even worse, losing 40%. 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. Longer term investors wouldn't be so upset, since they would have made 11%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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 example, we've discovered 1 warning sign for Hanyang Digitech that you should be aware of before investing here.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.