Shareholders of Worldex Industry & Trading (KOSDAQ:101160) Must Be Delighted With Their 806% Total Return

We think all investors should try to buy and hold high quality multi-year winners. While not every stock performs well, when investors win, they can win big. Don't believe it? Then look at the Worldex Industry & Trading Co., Ltd. (KOSDAQ:101160) share price. It's 782% higher than it was five years ago. This just goes to show the value creation that some businesses can achieve. On top of that, the share price is up 19% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 23% in 90 days).

Anyone who held for that rewarding ride would probably be keen to talk about it.

See our latest analysis for Worldex Industry & Trading

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the five years of share price growth, Worldex Industry & Trading moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Worldex Industry & Trading share price is up 165% in the last three years. In the same period, EPS is up 61% per year. This EPS growth is higher than the 38% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.27.

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

We know that Worldex Industry & Trading has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Worldex Industry & Trading's financial health with this free report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Worldex Industry & Trading's TSR for the last 5 years was 806%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Worldex Industry & Trading shareholders have received a total shareholder return of 119% over one year. And that does include the dividend. That gain is better than the annual TSR over five years, which is 55%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Take risks, for example - Worldex Industry & Trading has 1 warning sign we think you should be aware of.

Of course Worldex Industry & Trading may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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