Did Hanyang Digitech's (KOSDAQ:078350) Share Price Deserve to Gain 48%?

One simple way to benefit from the stock market is to buy an index fund. But if you choose individual stocks with prowess, you can make superior returns. For example, Hanyang Digitech Co., Ltd. (KOSDAQ:078350) shareholders have seen the share price rise 48% over three years, well in excess of the market return (24%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 17% in the last year.

Check out our latest analysis for Hanyang Digitech

Hanyang Digitech wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years Hanyang Digitech has grown its revenue at 11% annually. That's a very respectable growth rate. While the share price has done well, compounding at 14% yearly, over three years, that move doesn't seem over the top. Of course, valuation is quite sensitive to the rate of growth. Of course, it's always worth considering funding risks when a company isn't profitable.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Hanyang Digitech provided a TSR of 17% over the last twelve months. But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 1.9% over half a decade It is possible that returns will improve along with the business fundamentals. 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. To that end, you should learn about the 4 warning signs we've spotted with Hanyang Digitech (including 2 which are significant) .

For those who like to find winning investments this free list of growing 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 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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