Korea Circuit (KRX:007810 shareholders incur further losses as stock declines 10% this week, taking three-year losses to 64%

While it may not be enough for some shareholders, we think it is good to see the Korea Circuit Co., Ltd. (KRX:007810) share price up 22% in a single quarter. But that doesn't change the fact that the returns over the last three years have been disappointing. Tragically, the share price declined 64% in that time. So the improvement may be a real relief to some. After all, could be that the fall was overdone.

With the stock having lost 10% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

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Korea Circuit 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years Korea Circuit saw its revenue shrink by 5.1% per year. That's not what investors generally want to see. The share price decline of 18% compound, over three years, is understandable given the company doesn't have profits to boast of, and revenue is moving in the wrong direction. Having said that, if growth is coming in the future, now may be the low ebb for the company. We don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a maiden profit.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at Korea Circuit's financial health with this free report on its balance sheet.

A Different Perspective

We regret to report that Korea Circuit shareholders are down 39% for the year. Unfortunately, that's worse than the broader market decline of 6.7%. 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. On the bright side, long term shareholders have made money, with a gain of 10% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Korea Circuit you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.