Strong week for EV Advanced MaterialLtd (KOSDAQ:131400) shareholders doesn't alleviate pain of five-year loss

It's nice to see the EV Advanced Material Co.,Ltd (KOSDAQ:131400) share price up 11% in a week. But over the last half decade, the stock has not performed well. You would have done a lot better buying an index fund, since the stock has dropped 54% in that half decade.

While the last five years has been tough for EV Advanced MaterialLtd 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.

Check out our latest analysis for EV Advanced MaterialLtd

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

In the last half decade EV Advanced MaterialLtd saw its share price fall as its EPS declined below zero. The recent extraordinary items contributed to this situation. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. However, we can say we'd expect to see a falling share price in this scenario.

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 EV Advanced MaterialLtd's key metrics by checking this interactive graph of EV Advanced MaterialLtd's earnings, revenue and cash flow.

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). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Dividends have been really beneficial for EV Advanced MaterialLtd shareholders, and that cash payout explains why its total shareholder loss of 48%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

While the broader market lost about 1.2% in the twelve months, EV Advanced MaterialLtd shareholders did even worse, losing 36%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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 risks, for instance. Every company has them, and we've spotted 1 warning sign for EV Advanced MaterialLtd you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.