Sharjah Islamic Bank PJSC (ADX:SIB) Shareholders Received A Total Return Of Negative 2.2% In The Last Five Years

It's possible to achieve returns close to the market-weighted average return by buying an index fund. But even in a market-beating portfolio, some stocks will lag the market. While the Sharjah Islamic Bank PJSC (ADX:SIB) share price is down 23% over half a decade, the total return to shareholders (which includes dividends) was -2.2%. That's better than the market which declined 16% over the same time.

See our latest analysis for Sharjah Islamic Bank PJSC

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the unfortunate half decade during which the share price slipped, Sharjah Islamic Bank PJSC actually saw its earnings per share (EPS) improve by 7.6% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or possibly, the market was previously very optimistic, so the stock has disappointed, despite improving EPS.

Because of the sharp contrast between the EPS growth rate and the share price growth, we're inclined to look to other metrics to understand the changing market sentiment around the stock.

We note that the dividend has fallen in the last five years, so that may have contributed to the share price decline.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We know that Sharjah Islamic Bank PJSC has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Sharjah Islamic Bank PJSC stock, you should check out this free report showing analyst profit forecasts.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Sharjah Islamic Bank PJSC, it has a TSR of -2.2% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Sharjah Islamic Bank PJSC shareholders have received a total shareholder return of 7.4% over one year. And that does include the dividend. There's no doubt those recent returns are much better than the TSR loss of 0.4% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Keeping this in mind, a solid next step might be to take a look at Sharjah Islamic Bank PJSC's dividend track record. This free interactive graph is a great place to start.

Of course Sharjah Islamic Bank PJSC 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 AE exchanges.

When trading Sharjah Islamic Bank PJSC or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.