EV Advanced MaterialLtd (KOSDAQ:131400) adds ₩17b to market cap in the past 7 days, though investors from five years ago are still down 67%

This week we saw the EV Advanced Material Co.,Ltd (KOSDAQ:131400) share price climb by 22%. But that can't change the reality that over the longer term (five years), the returns have been really quite dismal. In that time the share price has delivered a rude shock to holders, who find themselves down 71% after a long stretch. So we're not so sure if the recent bounce should be celebrated. Of course, this could be the start of a turnaround.

The recent uptick of 22% could be a positive sign of things to come, so let's take a look at historical fundamentals.

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EV Advanced MaterialLtd wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last half decade, EV Advanced MaterialLtd saw its revenue increase by 11% per year. That's a fairly respectable growth rate. So the stock price fall of 11% per year seems pretty steep. The truth is that the growth might be below expectations, and investors are probably worried about the continual losses.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

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What About The Total Shareholder Return (TSR)?

We've already covered EV Advanced MaterialLtd's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. EV Advanced MaterialLtd's TSR of was a loss of 67% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

While the broader market gained around 8.8% in the last year, EV Advanced MaterialLtd shareholders lost 36%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. For instance, we've identified 2 warning signs for EV Advanced MaterialLtd that you should be aware of.

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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.