Optimism for KPS (KOSDAQ:256940) has grown this past week, despite one-year decline in earnings

The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the KPS Corporation (KOSDAQ:256940) share price is up 87% in the last 1 year, clearly besting the market decline of around 7.7% (not including dividends). That's a solid performance by our standards! It is also impressive that the stock is up 35% over three years, adding to the sense that it is a real winner.

Since it's been a strong week for KPS shareholders, let's have a look at trend of the longer term fundamentals.

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Given that KPS only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last year KPS saw its revenue grow by 38%. We respect that sort of growth, no doubt. While the share price performed well, gaining 87% over twelve months, you could argue the revenue growth warranted it. If revenue stays on trend, there may be plenty more share price gains to come. But it's crucial to check profitability and cash flow before forming a view on the future.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how KPS has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling KPS stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that KPS shareholders have received a total shareholder return of 87% over one year. That certainly beats the loss of about 3% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the 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. Case in point: We've spotted 4 warning signs for KPS you should be aware of, and 1 of them makes us a bit uncomfortable.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.