RingNet's (KOSDAQ:042500) underlying earnings growth outpaced the respectable return generated for shareholders over the past year

It hasn't been the best quarter for RingNet Co., Ltd. (KOSDAQ:042500) shareholders, since the share price has fallen 23% in that time. But that doesn't change the reality that over twelve months the stock has done really well. In that time we've seen the stock easily surpass the market return, with a gain of 39%.

While this past week has detracted from the company's one-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

Check out our latest analysis for RingNet

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

RingNet was able to grow EPS by 90% in the last twelve months. It's fair to say that the share price gain of 39% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about RingNet as it was before. This could be an opportunity. The caution is also evident in the lowish P/E ratio of 4.52.

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

Dive deeper into RingNet's key metrics by checking this interactive graph of RingNet's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, RingNet's TSR for the last 1 year was 42%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that RingNet shareholders have received a total shareholder return of 42% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 6% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand RingNet better, we need to consider many other factors. Even so, be aware that RingNet is showing 2 warning signs in our investment analysis , you should know about...

Of course RingNet 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 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.