Investing in Abu Dhabi Commercial Bank PJSC (ADX:ADCB) three years ago would have delivered you a 35% gain

Investors can buy low cost index fund if they want to receive the average market return. But if you invest in individual stocks, some are likely to underperform. For example, the Abu Dhabi Commercial Bank PJSC (ADX:ADCB) share price return of 19% over three years lags the market return in the same period. Unfortunately, the share price has fallen 1.5% over twelve months.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Abu Dhabi Commercial Bank PJSC

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 three years of share price growth, Abu Dhabi Commercial Bank PJSC achieved compound earnings per share growth of 21% per year. This EPS growth is higher than the 6% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.53.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Abu Dhabi Commercial Bank PJSC has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst 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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Abu Dhabi Commercial Bank PJSC, it has a TSR of 35% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Abu Dhabi Commercial Bank PJSC shareholders have received a total shareholder return of 5.2% over the last year. That's including the dividend. Having said that, the five-year TSR of 8% a year, is even better. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. It's always interesting to track share price performance over the longer term. But to understand Abu Dhabi Commercial Bank PJSC better, we need to consider many other factors. For example, we've discovered 1 warning sign for Abu Dhabi Commercial Bank PJSC that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Emirian 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.