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Did Business Growth Power Oshkosh's (NYSE:OSK) Share Price Gain of 101%?

Simply Wall St

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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Oshkosh Corporation (NYSE:OSK) share price has soared 101% in the last three years. That sort of return is as solid as granite. On top of that, the share price is up 20% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 13% in 90 days).

View our latest analysis for Oshkosh

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 three years of share price growth, Oshkosh achieved compound earnings per share growth of 38% per year. This EPS growth is higher than the 26% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. We'd venture the lowish P/E ratio of 11.09 also reflects the negative sentiment around the stock.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

NYSE:OSK Past and Future Earnings, April 9th 2019

It is of course excellent to see how Oshkosh has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Oshkosh stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Oshkosh's TSR for the last 3 years was 109%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Oshkosh shareholders are up 4.1% for the year (even including dividends). Unfortunately this falls short of the market return. On the bright side, the longer term returns (running at about 8.6% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. If you would like to research Oshkosh in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

Of course Oshkosh may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.