OC Oerlikon's (VTX:OERL) earnings trajectory could turn positive as the stock lifts 8.3% this past week

Simply Wall St · 6d ago

The main aim of stock picking is to find the market-beating stocks. But even the best stock picker will only win with some selections. At this point some shareholders may be questioning their investment in OC Oerlikon Corporation AG (VTX:OERL), since the last five years saw the share price fall 55%. Even worse, it's down 18% in about a month, which isn't fun at all. But this could be related to poor market conditions -- stocks are down 10% in the same time.

While the last five years has been tough for OC Oerlikon shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

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To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Looking back five years, both OC Oerlikon's share price and EPS declined; the latter at a rate of 8.3% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 15% per year, over the period. This implies that the market was previously too optimistic about the stock.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
SWX:OERL Earnings Per Share Growth April 15th 2025

We know that OC Oerlikon has improved its bottom line lately, but is it going to grow revenue? Check if analysts think OC Oerlikon will grow revenue in the future.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for OC Oerlikon the TSR over the last 5 years was -42%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Investors in OC Oerlikon had a tough year, with a total loss of 11% (including dividends), against a market gain of about 2.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand OC Oerlikon better, we need to consider many other factors. For example, we've discovered 3 warning signs for OC Oerlikon that you should be aware of before investing here.

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