Organon (NYSE: OGN) publishes better than expected sales in the first quarter, but the shares drop by 23.5%

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The operating margin is one of the best measurements of profitability because it shows us how much money a company takes home after deducting all core costs such as marketing and F&E.

Organon has been an efficient company in the past five years. It was one of the more profitable companies in the health sector with an average operating range of 26.3%.

In the past five years, the Organon operating margin has dropped the trend in its profitability and has dropped by 17.1 percentage points in the past five years. The company’s two -year trajectory also shows that it did not bring its profitability back to climax because its margin decreased by 2 percentage points. This performance was bad, no matter how you look at it – it shows that the expenses rise and that these costs could not pass on to its customers.

In the first quarter, Organon achieved an operating profit margin of 21.5%, which corresponds to a decline of 1.7 percentage points compared to the previous year. This reduction is quite tiny and indicates that the company’s overall cost structure was relatively stable.

We pursue the long -term change in profit per share (EPS) for the same reason as long -term sales growth. Compared to the sales, EPS shows whether the growth of a company is profitable.

Organon’s total year EPS has fallen by 93.7% or 18% per year in the past four years. We tend to promote our readers of companies with falling income and EPS where a decreasing income can change that can change secular trends and preferences. If the flood turns unexpectedly, the low security of Organon could leave its share price susceptible to large downturn cocks.

In the first quarter, Organon EPS reported to USD 1.02, which had dropped after USD 1.22 in the same quarter of the previous year. Despite the year to year, this pressure easily solved the estimates of the analysts. In the next 12 months, Wall Street expects the total year EPS of $ 3.91 by 1.1%for the year as a whole.

We enjoyed seeing the EBITDA expectations of Organon this quarter. We were also glad that the revenue only exceeded the Wall Street estimates. Overall, we think that this was a solid quarter, but the market seemed to hope for more. The share acted by 23.5% to $ 9.88 immediately after the results.

Should you buy the stock or not? With this decision, it is important to take into account its assessment, business qualities and what happened in the last quarter. We treat this free of charge in our implementable full research report, which you can read here.