It’s been a soft week for Wonik Holdings Co.,Ltd. (KOSDAQ:030530) shares, which are down 19%. But that cannot eclipse the spectacular share price rise we’ve seen over the last twelve months. In that time, shareholders have had the pleasure of a 883% boost to the share price. So it is not that surprising to see the stock retrace a little. The real question is whether the fundamental business performance can justify the strong increase over the long term. Anyone who held for that rewarding ride would probably be keen to talk about it.
While this past week has detracted from the company’s one-year return, let’s look at the recent trends of the underlying business and see if the gains have been in alignment.
Given that Wonik HoldingsLtd didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.
Wonik HoldingsLtd grew its revenue by 2.5% last year. That’s not a very high growth rate considering it doesn’t make profits. So it’s truly surprising that the share price rocketed 883% in a single year. It’s great to see that some have made big profits, but we aren’t so sure that the increase is justified. This is an example of the huge profits some lucky shareholders occasionally make on growth stocks.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Wonik HoldingsLtd stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We’re pleased to report that Wonik HoldingsLtd shareholders have received a total shareholder return of 883% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 36% 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. For instance, we’ve identified 2 warning signs for Wonik HoldingsLtd that you should be aware of.
For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on South Korean exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
