The Orion Engineered Carbons S.A. (NYSE:OEC) share price has had a bad week, falling 23%. In contrast the stock has done reasonably well over three years. In that time the stock gained 55%, besting the market return of 49%.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Orion Engineered Carbons was able to grow its EPS at 38% per year over three years, sending the share price higher. This EPS growth is higher than the 16% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.26.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Orion Engineered Carbons has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Orion Engineered Carbons’s balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Orion Engineered Carbons, it has a TSR of 72% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
The last twelve months weren’t great for Orion Engineered Carbons shares, which cost holders 25%, including dividends, while the market was up about 3.1%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Fortunately the longer term story is brighter, with total returns averaging about 20% per year over three years. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. Keeping this in mind, a solid next step might be to take a look at Orion Engineered Carbons’s dividend track record. This free interactive graph is a great place to start.
Of course Orion Engineered Carbons 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 email@example.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.