Aldrees Petroleum and Transport Services' (TADAWUL:4200) five-year total shareholder returns outpace the underlying earnings growth
Aldrees Petroleum and Transport Services Company (TADAWUL:4200) shareholders have seen the share price descend 20% over the month. But that does not change the realty that the stock's performance has been terrific, over five years. Indeed, the share price is up a whopping 429% in that time. Arguably, the recent fall is to be expected after such a strong rise. Only time will tell if there is still too much optimism currently reflected in the share price.
While the stock has fallen 9.9% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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).
Over half a decade, Aldrees Petroleum and Transport Services managed to grow its earnings per share at 33% a year. So the EPS growth rate is rather close to the annualized share price gain of 40% per year. This indicates that investor sentiment towards the company has not changed a great deal. Indeed, it would appear the share price is reacting to the EPS.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Aldrees Petroleum and Transport Services has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Aldrees Petroleum and Transport Services the TSR over the last 5 years was 489%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
It's good to see that Aldrees Petroleum and Transport Services has rewarded shareholders with a total shareholder return of 63% in the last twelve months. And that does include the dividend. That's better than the annualised return of 43% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before forming an opinion on Aldrees Petroleum and Transport Services you might want to consider these 3 valuation metrics.
Of course Aldrees Petroleum and Transport Services 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 Saudi exchanges.
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.