Kyungdong City Gas' (KRX:267290) Stock Price Has Reduced 43% In The Past Three Years

Many investors define successful investing as beating the market average over the long term. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Kyungdong City Gas Co., Ltd (KRX:267290) shareholders have had that experience, with the share price dropping 43% in three years, versus a market return of about 37%. It's up 1.7% in the last seven days.

See our latest analysis for Kyungdong City Gas

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 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.

Kyungdong City Gas saw its EPS decline at a compound rate of 9.3% per year, over the last three years. The share price decline of 17% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. This increased caution is also evident in the rather low P/E ratio, which is sitting at 6.13.

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

This free interactive report on Kyungdong City Gas' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Kyungdong City Gas' TSR for the last 3 years was -36%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Kyungdong City Gas produced a TSR of 0.7% over the last year. It's always nice to make money but this return falls short of the market return which was about 43% for the year. On the bright side, that's certainly better than the yearly loss of about 11% endured over the last three years, implying that the company is doing better recently. We hope the turnaround in fortunes continues. It's always interesting to track share price performance over the longer term. But to understand Kyungdong City Gas better, we need to consider many other factors. For example, we've discovered 3 warning signs for Kyungdong City Gas (1 can't be ignored!) that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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