Stock Analysis

Despite the downward trend in earnings at ATON (KOSDAQ:158430) the stock surges 29%, bringing one-year gains to 38%

KOSDAQ:A158430
Source: Shutterstock

If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. For example, the ATON Inc. (KOSDAQ:158430) share price is up 37% in the last 1 year, clearly besting the market decline of around 5.3% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Zooming out, the stock is actually down 24% in the last three years.

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

View our latest analysis for ATON

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During the last year, ATON actually saw its earnings per share drop 11%.

This means it's unlikely the market is judging the company based on earnings growth. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

We doubt the modest 0.5% dividend yield is doing much to support the share price. We think that the revenue growth of 6.2% could have some investors interested. We do see some companies suppress earnings in order to accelerate revenue growth.

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

earnings-and-revenue-growth
KOSDAQ:A158430 Earnings and Revenue Growth December 13th 2024

It is of course excellent to see how ATON has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at ATON's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that ATON shareholders have received a total shareholder return of 38% over the last year. That's including the dividend. That's better than the annualised return of 1.0% over half a decade, implying that the company is doing better recently. 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 ATON better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with ATON (including 2 which are concerning) .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.