Shares of Tapex Co., Ltd. (KRX:055490) rose 11% this week. However, only a shortsighted person could ignore three years of astonishing declines. During that time, the stock has melted like a snowball in the desert, dropping 75%. Perhaps the recent recovery is to be expected after such a severe decline. Only time will tell if the company can sustain the recovery.
The last three years have been tough for Tapex shareholders, but there was a bright spot last week, so let's take a look at the longer term fundamentals to see if they're driving the negative returns.
Check out our latest analysis for Tapex
While the efficient market hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems and investors are not always rational. Comparing earnings per share (EPS) and share price changes over time can provide a view into how investor attitudes towards a company have changed over time.
During the three years that the share price was declining, Tapex's earnings per share (EPS) fell 28% each year. The 37% fall in the share price is actually steeper than the fall in EPS. So it's possible that the EPS decline has disappointed the market and caused investors to hesitate to buy.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
KOSE:A055490 Earnings per Share Growth August 13, 2024
This free interactive report on Tapex's earnings, revenue and cash flow is a great starting point, if you want to investigate the stock further.
A different perspective
Unfortunately, Tapex shareholders are down 48% this year (even including dividends). Unfortunately, this is worse than the overall market's decline of 0.6%. That said, it's inevitable that some stocks will become oversold in a falling market. The key is to keep an eye on the fundamental trends. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualized loss of 0.5% over the past five years. We know that Baron Rothschild has said that investors should 'buy when the blood is flowing', but we would caution that investors should first make sure they are buying a quality business. It's always interesting to track the long term performance of a share price. But to understand Tapex better, there are many other factors to consider. To do that, you should be aware of the 4 warning signs we've spotted for Tapex.
If you would prefer to check out other companies — some of which may be superior financially — then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Korean exchanges.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
