HANDYSOFT's (KOSDAQ:220180) three-year decline in earnings translates into losses for shareholders

HANDYSOFT, Inc. (KOSDAQ:220180) has rebounded strongly over the last week, with the share price soaring 49%. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 23% in the last three years, falling well short of the market return.

While the last three years has been tough for HANDYSOFT shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

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To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

HANDYSOFT saw its EPS decline at a compound rate of 26% per year, over the last three years. This fall in the EPS is worse than the 8% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 62.27.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It might be well worthwhile taking a look at our free report on HANDYSOFT's earnings, revenue and cash flow.

A Different Perspective

HANDYSOFT shareholders are up 4.5% for the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 0.3% per year over five year. This suggests the company might be improving over time. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with HANDYSOFT , and understanding them should be part of your investment process.

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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.