Yahoo Finance Watches of Switzerland Group (LON:WOSG) jumps 3.2% this week, though earnings growth is still tracking behind three-year shareholder returns
While Watches of Switzerland Group plc (LON:WOSG) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 17% in the last quarter. In contrast, the return over three years has been impressive. In three years the stock price has launched 197% higher: a great result. After a run like that some may not be surprised to see prices moderate. Only time will tell if there is still too much optimism currently reflected in the share price.
The past week has proven to be lucrative for Watches of Switzerland Group investors, so let's see if fundamentals drove the company's three-year performance.
See our latest analysis for Watches of Switzerland Group
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 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.
Watches of Switzerland Group was able to grow its EPS at 77% per year over three years, sending the share price higher. The average annual share price increase of 44% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
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. This free interactive report on Watches of Switzerland Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Watches of Switzerland Group shareholders are down 13% for the year, falling short of the market return. The market shed around 3.1%, no doubt weighing on the stock price. Investors are up over three years, booking 44% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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