Hyundai's Corner Is Nearing

Hyundai Motor Co. has been stuck in second gear for so long that it's easy to forget it can go any faster.

Its stock fell by almost a third in the space of three months in late 2014 in the face of wage pressures, a stronger South Korean won and concerns surrounding the $10 billion purchase of a site for its new headquarters in Seoul's upscale Gangnam district. Since then, it's bounced around between about 140,000 won and 160,000 won, without any real sign of improvement.

Such lackluster performance is bad enough if it's due to investors losing faith in a company's earnings potential. In Hyundai's case, it's worse: Earnings-based valuations have actually been going up, with the blended forward 12-month price-earnings ratio touching its highest level in six-and-a-half-years last week. The stability of Hyundai's share price is an indication that shareholders' views are getting rosier and rosier, even as actual earnings prospects deteriorate.