Investors Who Bought SK TelecomLtd (KRX:017670) Shares A Year Ago Are Now Up 12%

On average, over time, stock markets tend to rise higher. This makes investing attractive. But if when you choose to buy stocks, some of them will be below average performers. For example, the SK Telecom Co.,Ltd (KRX:017670), share price is up over the last year, but its gain of 12% trails the market return. Having said that, the longer term returns aren't so impressive, with stock gaining just 2.8% in three years.

View our latest analysis for SK TelecomLtd

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the last year SK TelecomLtd grew its earnings per share (EPS) by 69%. It's fair to say that the share price gain of 12% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about SK TelecomLtd as it was before. This could be an opportunity.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that SK TelecomLtd has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. In the case of SK TelecomLtd, it has a TSR of 17% for the last year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

SK TelecomLtd shareholders are up 17% for the year (even including dividends). But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 6% per year over five year. It is possible that returns will improve along with the business fundamentals. Before forming an opinion on SK TelecomLtd you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.

Of course SK TelecomLtd 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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