Despite the downward trend in earnings at Galaxia Moneytree (KOSDAQ:094480) the stock pops 11%, bringing five-year gains to 217%

Simply Wall St · 10/18 21:57

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. For example, the Galaxia Moneytree Co., Ltd. (KOSDAQ:094480) share price has soared 202% in the last half decade. Most would be very happy with that. Better yet, the share price has risen 11% in the last week.

Since it's been a strong week for Galaxia Moneytree shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Galaxia Moneytree

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 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, Galaxia Moneytree actually saw its EPS drop 14% per year.

Essentially, it doesn't seem likely that investors are focused on EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We doubt the modest 0.5% dividend yield is attracting many buyers to the stock. On the other hand, Galaxia Moneytree's revenue is growing nicely, at a compound rate of 11% over the last five years. In that case, the company may be sacrificing current earnings per share to drive growth.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
KOSDAQ:A094480 Earnings and Revenue Growth October 18th 2024

If you are thinking of buying or selling Galaxia Moneytree stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Galaxia Moneytree the TSR over the last 5 years was 217%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Galaxia Moneytree has rewarded shareholders with a total shareholder return of 115% in the last twelve months. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 26% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. To that end, you should learn about the 5 warning signs we've spotted with Galaxia Moneytree (including 3 which are a bit concerning) .

We will like Galaxia Moneytree better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on South Korean exchanges.