As the earnings announcement period for the second quarter (April to June) of this year comes to an end, it has become apparent that stock prices are declining due to 'earning shocks' that fall short of market expectations. In contrast, even those that record 'earning surprises' exceeding market expectations show a tendency for stock prices to either rise minimally or even decrease.
Kim Min-kyu, a researcher at KB Securities, noted in a report on the 14th that among the companies that announced earnings the previous day, those that fell short of market expectations by 10% to 20% saw an average stock price decline of 9.3%. Even those reporting earnings more than 50% above market expectations recorded an average stock price drop of 9.1%.
This contrasts with the situation on the 15th of last month, when companies that posted earnings more than 50% below market expectations still saw an average stock price increase of about 5%. Kim added, "There is a situation where the psychology of 'wanting to sell whenever a chance arises' dominates, leading to failure to recognize good news as beneficial and to amplify negative news."
However, Kim explained that this sentiment is difficult to sustain for a long time in a bullish market. He stated, "I believe there is an opportunity to buy stocks that, despite recording all-time high earnings, have seen significant declines from their peaks."
Kim analyzed stocks that recorded the highest sales and operating profits since 2010 and have significantly dropped in share price. By sector, many were in cosmetics, software, healthcare, and industrial goods.
Among the stocks that recorded both sales and operating profits at all-time highs, the one that experienced the largest drop in share price relative to its peak was SHIFT UP. This year's peak was 68,800 won, but it was 40,300 won as of the previous day. Other companies like SILICON2, ROKIT Healthcare, Kolmar Korea, Daewoong Pharmaceutical, and CLASSYS also saw stock price declines in the 20% range compared to their peaks.
Companies that achieved the largest operating profits yet saw significant declines in stock prices include KONA I, HS HYOSUNG, KD Navien, Boryung, and Hyundai AutoEver.
Among those with the highest revenues but declining stock prices are SOOP, Shinsegae I&C, Kakao Pay, Bioneer, d'Alba Global, and Poongsan.