Return

Perf 3Y

3-Year Return

💡 What is Perf 3Y (3-Year Return)? - A Mid-Term Investment Report Card

Perf 3Y stands for "Performance 3 Years," which in Korean is called 3-Year Return (3-Year Return). It's a metric that shows, as a percentage (%), how much a stock's price has gone up (or down) over the past 3 years. As a simple analogy, it's like a "mid-term investment report card" that tells you how much you would have earned (or lost) if you had invested in that stock 3 years ago.

Korean-English Keyword Glossary

For example, if Nvidia's (NVDA) Perf 3Y is +800%, it means that 1,000,000 KRW invested 3 years ago would now be worth about 9,000,000 KRW (1,000,000 KRW principal + 8,000,000 KRW profit). On the flip side, if a stock's Perf 3Y is -50%, it means 1,000,000 KRW would have shrunk to 500,000 KRW.

The 3-year period is a very meaningful timeframe in investing. 1 year is too short and can easily be swayed by temporary market moods, while 5 or 10 years is a long period during which the business environment can change dramatically. 3 years is just right: long enough for a company to execute its mid-term strategy and show results, and short enough to still feel relevant. That's also why many fund managers and analysts treat the 3-year return as a key evaluation metric.

📅 Why Comparing Returns Across Different Periods Matters

To use the 3-year return properly, you need to look at it alongside returns from other periods. Each timeframe carries a different meaning.

Comparing With 1-Month to 1-Year Returns

Short-term returns (1 month, 3 months, YTD) reflect the recent market mood. If the 3-year return is +200% but the most recent 1-year return is -30%, it means the stock did great in the first 2 years but has been trending down recently. It could be in a correction phase, which might be either a buying opportunity or the start of a downtrend. Conversely, if the 3-year return is +50% but the 1-year return is +80%, the stock has surged sharply recently, so you should check whether it's overheated.

Comparing With 5-Year and 10-Year Returns

Comparing with long-term returns lets you spot whether growth is speeding up or slowing down. If the 10-year return is +500% and the 3-year return is +300%, it means the recent 3 years grew much faster than the previous 7 years. This could be a positive sign that the company has entered a rapid-growth phase. On the other hand, if the 10-year return is +200% but the 3-year return is only +20%, growth has slowed significantly, which warrants caution.

Converting to an Annualized Return (CAGR)

Converting the 3-year return into an annualized rate makes it easier to compare with other stocks at a glance. For example, a 3-year return of +100% is roughly +26% per year, and a 3-year return of +50% is roughly +14.5% per year. Since the historical annualized return of the S&P 500 is around 10%, an annualized return of 15% or more means the stock has clearly beaten the market. The CAGR formula is (1 + Total Return)^(1/3) - 1.

📊 How to Interpret the 3-Year Return

Excellent: +100% or more (annualized 26%+)

This means your initial investment more than doubled over 3 years. A great example is Nvidia (NVDA), whose 3-year return reached several hundred percent thanks to the AI chip boom. Companies that deliver this kind of performance usually rode a major industry megatrend or dominated the market with an innovative product/service during that period. However, since the stock has already risen a lot, you can't expect the same return going forward, so always check the valuation.

Good: +30% to +100% (annualized 9-26%)

This means the stock matched or beat the S&P 500 average. Large-cap blue chips like Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) often fall into this range. Consistently matching the market average isn't easy, so stocks in this range can be considered to have solid fundamentals.

Average: 0% to +30% (annualized 0-9%)

Your principal was preserved but the stock underperformed the market. Stocks in this range may be facing problems like slowing growth, increased competition, or industry disruption. Intel (INTC) once sat in this range because it was losing market share to AMD and NVDA in the semiconductor market.

Weak: Negative (Below 0%)

This means you actually lost money over the 3-year holding period. A negative return over such a long span suggests the company may have serious fundamental issues. Of course, exceptional events like the COVID-19 pandemic can cause this, but if the rest of the market recovered while this stock didn't, it's a serious warning sign.

When interpreting returns, you must always compare them with the S&P 500 (SPY) return over the same period. For example, even if a stock returned +40% over 3 years, if the S&P 500 rose +60% in the same period, the stock underperformed the market. You'd have been better off investing in an index fund, so you should reconsider whether there's a reason to keep holding that stock.

🔄 Combining With Other Return Metrics

3-Year Return + Dividend Yield

Perf 3Y only reflects price changes and does not include dividends. Stocks with high dividends, like Coca-Cola (KO) or AT&T (T), can look undervalued if you look at price returns alone. For example, if the price return is +15% and the annual dividend yield is 3%, the actual total return is closer to about +24% (15% + 3% × 3 years). If you reinvest the dividends, the compounding effect pushes the return even higher. So when evaluating dividend stocks, always check the Total Return as well.

3-Year Return + Volatility (Beta, ATR)

Even with the same return, different volatility means a totally different investing experience. Suppose Stock A and Stock B both have a 3-year return of +60%. If A rose steadily to reach +60%, but B shot up to +150%, crashed -50%, then climbed back to +60%, A was clearly the better investment. Looking at the risk-adjusted return (Sharpe ratio) together helps you tell the difference.

3-Year Return + Fundamentals (Revenue, Earnings Growth)

If the stock price has risen a lot over 3 years, you need to figure out whether the cause is real earnings growth or just rising expectations (multiple expansion). If revenue and earnings grew at roughly the same pace as the stock, that's a healthy rally. But if only the price went up while earnings stayed flat, it could be a bubble. For a stock with a 3-year return of +200%, if revenue grew +150% over those 3 years, that's healthy. If revenue stayed flat but the stock rose +200%, that's a danger sign.

🎯 Practical Ways to Use It

Using It as a Screening Tool

You can use the 3-year return as a filter to narrow down stocks. For example, if you screen for "3-year return above the S&P 500 + ROE 15% or higher + debt ratio below 50%," you can find stocks that have delivered steady performance with solid financials. Using the Perf 3Y filter in the Finviz screener makes it easy to set up.

Using It for Portfolio Review

Regularly check the 3-year returns of the stocks you own. Stocks that consistently underperform the S&P 500 should be considered for replacement. If you have any holdings with a negative 3-year return, seriously ask yourself, "Why am I still holding this stock?" If the future outlook isn't clear, it may be wise to cut your losses and invest the money in a better opportunity.

Mean Reversion Strategy

Stocks with extremely high or low 3-year returns tend to revert to the mean. Historically, stocks with a 3-year return above +300% often underperformed the market average over the following 1-2 years, while quality stocks with returns of -50% or worse often bounced back afterward. However, this strategy only works when the company's fundamentals are still solid; don't apply it to companies in structural decline.

⚠️ Things to Watch Out For

1. Past returns don't guarantee future results: This is the most important rule. Just because a stock went up +500% over 3 years doesn't mean it will keep doing so. In fact, stocks that have already risen a lot often have high valuations, leaving less room to climb.

2. Watch out for starting-point bias: If 3 years ago happened to be the bottom of the COVID crash, the return will look unrealistically high. The starting point can heavily influence the result, so always consider the context.

3. Dividends are not included: As mentioned earlier, Perf 3Y only reflects price changes. For high-dividend stocks paying 4-5% per year, the actual total return can be 12-15% higher than the displayed return.

4. Survivorship bias: Screening results exclude stocks that were delisted or merged. Looking only at survivors creates the illusion that returns were better than they really were.

5. Consider industry characteristics: Comparing the 3-year return of a tech stock directly with a utility stock is meaningless. Compare within the same industry, or against the industry average.

✅ Checklist

☑ Have you compared the 3-year return with the S&P 500 (SPY) return?
☑ Have you converted it to an annualized return (CAGR) to compare with other stocks?
☑ Have you added the dividend yield to calculate the total return?
☑ Have you analyzed the trend alongside other periods (1 year, 5 years, 10 years)?
☑ Have you checked whether the price gain is backed by earnings growth?
☑ Have you compared with competitors in the same industry?
☑ Have you considered the market conditions at the starting point (3 years ago)?
☑ Have you made your judgment together with current valuation (P/E, P/B)?

❓ Frequently Asked Questions (FAQ)

Q. Should I buy a stock now just because its 3-year return is high?

A. A high 3-year return is proof that the stock grew well over that period, but it doesn't guarantee you'll earn the same return by buying now. The key question is, "Can it still grow going forward?" If revenue and earnings keep rising, the industry outlook is bright, and the valuation isn't excessive, you can consider investing. But if expectations are already overly reflected, such as a P/E ratio above 100, you should be cautious. For example, even if Nvidia's (NVDA) 3-year return is high, you can buy it if you believe AI growth will continue, but you should consider taking profits if signs of slowing growth appear.

Q. Should I unconditionally avoid stocks with a negative 3-year return?

A. Not necessarily. You need to analyze why the 3-year return is negative. If the cause is temporary, such as a short-term industry downturn, a transition period after management change, or a heavy investment phase, it could actually be a bargain-buying opportunity. However, if the cause is fundamental problems like ongoing market share loss, loss of technological competitiveness, or structural industry decline, it's better to avoid it. Compare with peers in the same industry to see whether only that particular stock is weak, or whether the whole industry is weak.

Q. Can I interpret an ETF's 3-year return the same way as an individual stock?

A. The basic principle is the same, but there are a few differences. Because ETFs are diversified investments, they have lower volatility than individual stocks and rarely produce extreme returns (+500% or -80%). The 3-year return of the S&P 500 ETF (SPY) serves as a benchmark for the overall health of the market. The 3-year return of sector or thematic ETFs is useful for understanding trends in that industry or theme. For leveraged ETFs, be careful: long-term holding can cause compounding effects that significantly diverge the return from the underlying index.

Q. Is a 3-year return of +100% the same as an annualized return of +33%?

A. No! This is a very common misconception. If you simply divide 100% by 3, you get 33%, but the actual annualized return (CAGR) is about 26%. This is because of compounding. If 1,000,000 KRW grows at 26% per year with compounding for 3 years: after 1 year it's 1,260,000 KRW, after 2 years about 1,590,000 KRW, after 3 years about 2,000,000 KRW. With simple interest at 33% per year for 3 years, you'd end up with about 1,990,000 KRW, so they're similar in this case, but the gap widens as returns get higher. A 3-year return of +300% gives a CAGR of about 59%, not 100%.

🇰🇷 Notes for Korean Investors

Exchange Rate Impact: The actual return for a Korean investor is heavily affected by the KRW-USD exchange rate. For example, even if a US stock's 3-year return is +50%, if the KRW-USD rate went from 1,100 to 1,350 over the same period, the return in KRW terms is roughly +83%. Conversely, if the rate falls, your KRW return shrinks. Over a 3-year span, the exchange rate can move 10-20% or more, so it's a factor you can't ignore.

Tax Considerations: Selling after holding for 3 years triggers capital gains tax. In Korea, capital gains tax on US stocks is 22% (including local tax), with a basic exemption of 2.5 million KRW per year. If you sell a stock that earned a large profit over 3 years all at once in a single year, the tax burden can be heavy, so consider splitting the sale around year-end and the start of the next year to use the basic exemption twice.

Comparing With Domestic Stocks: Comparing the KOSPI's 3-year return with the US S&P 500's 3-year return lets you objectively judge the effect of investing overseas. Over the past 10 years, the S&P 500 has tended to significantly outperform the KOSPI, but this isn't always the case and can vary by period.

Where to Find the Data: You can check Perf 3Y for individual stocks on Finviz, and Yahoo Finance also shows returns by period under the Performance tab. On Korean brokerage apps, you can set the chart period to 3 years for overseas stocks to see it visually.