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Long term investing can be life changing when you buy and hold the truly great businesses. And we’ve seen some truly amazing gains over the years. To wit, the Paseco Co. Ltd (KOSDAQ:037070) share price has soared 354% over five years. If that doesn’t get you thinking about long term investing, we don’t know what will. On top of that, the share price is up 69% in about a quarter.
View our latest analysis for Paseco
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
During five years of share price growth, Paseco achieved compound earnings per share (EPS) growth of 18% per year. This EPS growth is lower than the 35% average annual increase in the share price. So it’s fair to assume the market has a higher opinion of the business than it did five years ago. That’s not necessarily surprising considering the five-year track record of earnings growth.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into Paseco’s key metrics by checking this interactive graph of Paseco’s earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We’ve already covered Paseco’s share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Paseco hasn’t been paying dividends, but its TSR of 432% exceeds its share price return of 354%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.
A Different Perspective
It’s nice to see that Paseco shareholders have received a total shareholder return of 150% over the last year. That gain is better than the annual TSR over five years, which is 40%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Take risks, for example – Paseco has 1 warning sign we think you should be aware of.
But note: Paseco may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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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