How Much Did Lotte Data Communication's(KRX:286940) Shareholders Earn From Share Price Movements Over The Last Year?

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in Lotte Data Communication Company (KRX:286940) have tasted that bitter downside in the last year, as the share price dropped 13%. That contrasts poorly with the market return of 35%. We wouldn't rush to judgement on Lotte Data Communication because we don't have a long term history to look at. Unhappily, the share price slid 1.1% in the last week.

Check out our latest analysis for Lotte Data 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 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.

Unfortunately Lotte Data Communication reported an EPS drop of 33% for the last year. This fall in the EPS is significantly worse than the 13% the share price fall. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.

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

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

A Different Perspective

Given that the market gained 35% in the last year, Lotte Data Communication shareholders might be miffed that they lost 11% (even including dividends). While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 1.8% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. Even so, be aware that Lotte Data Communication is showing 3 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

Of course Lotte Data Communication 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 KR exchanges.

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This article by Simply Wall St is general in nature. 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.
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