The 12% return this week takes Lee Ku Industrial's (KRX:025820) shareholders five-year gains to 222%

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. For example, the Lee Ku Industrial Co., Ltd. (KRX:025820) share price has soared 201% in the last half decade. Most would be very happy with that. Also pleasing for shareholders was the 27% gain in the last three months. But this could be related to the strong market, which is up 19% in the last three months.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last half decade, Lee Ku Industrial became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

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

Dive deeper into Lee Ku Industrial's key metrics by checking this interactive graph of Lee Ku Industrial's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Lee Ku Industrial the TSR over the last 5 years was 222%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Lee Ku Industrial shareholders gained a total return of 56% during the year. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 26% per year over five year. This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Lee Ku Industrial better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Lee Ku Industrial (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.

But note: Lee Ku Industrial 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 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.