The three-year loss for SHINSEGAE Information & Communication (KRX:035510) shareholders likely driven by its shrinking earnings

This week we saw the SHINSEGAE Information & Communication Inc. (KRX:035510) share price climb by 11%. But that is small recompense for the exasperating returns over three years. In that time, the share price dropped 54%. So it is really good to see an improvement. While many would remain nervous, there could be further gains if the business can put its best foot forward.

On a more encouraging note the company has added ₩13b to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

View our latest analysis for SHINSEGAE Information & Communication

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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the three years that the share price fell, SHINSEGAE Information & Communication's earnings per share (EPS) dropped by 10.0% each year. This reduction in EPS is slower than the 23% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 4.37.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, SHINSEGAE Information & Communication's TSR for the last 3 years was -50%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

SHINSEGAE Information & Communication shareholders are down 14% for the year (even including dividends), but the market itself is up 7.8%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 0.3%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Take risks, for example - SHINSEGAE Information & Communication has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

But note: SHINSEGAE Information & Communication may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.