Share Price Aside, Al Dhafra Insurance Company P.S.C (ADX:DHAFRA) Has Delivered Shareholders A 25% Return.

Investors are understandably disappointed when a stock they own declines in value. But no-one can make money on every call, especially in a declining market. While the Al Dhafra Insurance Company P.S.C. (ADX:DHAFRA) share price is down 10% in the last three years, the total return to shareholders (which includes dividends) was 25%. That's better than the market which declined 8.6% over the last three years. It's down 4.4% in the last seven days.

Check out our latest analysis for Al Dhafra Insurance Company P.S.C

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.

Although the share price is down over three years, Al Dhafra Insurance Company P.S.C actually managed to grow EPS by 15% per year in that time. 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). Alternatively, growth expectations may have been unreasonable in the past.

It is a little bizarre to see the share price down, despite a strong improvement to earnings per share. So we'll have to take a look at other metrics to try to understand the price action.

Given the healthiness of the dividend payments, we doubt that they've concerned the market. However, the weak share price might be related to the fact revenue has been disappearing at a rate of 10% each year, over three years. In that case, the current EPS might be viewed by some as difficult to sustain.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

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. As it happens, Al Dhafra Insurance Company P.S.C's TSR for the last 3 years was 25%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Al Dhafra Insurance Company P.S.C rewarded shareholders with a total shareholder return of 19% over the last year. And yes, that does include the dividend. That gain actually surpasses the 8% TSR it generated (per year) over three years. Given the track record of solid returns over varying time frames, it might be worth putting Al Dhafra Insurance Company P.S.C on your watchlist. It's always interesting to track share price performance over the longer term. But to understand Al Dhafra Insurance Company P.S.C better, we need to consider many other factors. For example, we've discovered 2 warning signs for Al Dhafra Insurance Company P.S.C that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

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