The Owens & Minor, Inc. (NYSE:OMI) share price has had a bad week, falling 19%. On the other hand, over the last twelve months the stock has delivered rather impressive returns. During that period, the share price soared a full 186%. So some might not be surprised to see the price retrace some. More important, going forward, is how the business itself is going.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year Owens & Minor grew its earnings per share (EPS) by 96%. We note, however, that extraordinary items have impacted earnings. The share price gain of 186% certainly outpaced the EPS growth. So it's fair to assume the market has a higher opinion of the business than it a year ago.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Owens & Minor's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Owens & Minor's TSR of 186% for the year exceeded its share price return, because it has paid dividends.
A Different Perspective
It's good to see that Owens & Minor has rewarded shareholders with a total shareholder return of 186% in the last twelve months. And that does include the dividend. That certainly beats the loss of about 9.2% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Owens & Minor (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.
Owens & Minor is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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