Stock Analysis

Arkan Building Materials Company (ARKAN) PJSC (ADX:EMSTEEL) shareholders have earned a 34% CAGR over the last three years

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ADX:EMSTEEL
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It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For instance the Arkan Building Materials Company (ARKAN) PJSC (ADX:EMSTEEL) share price is 143% higher than it was three years ago. Most would be happy with that. The last week saw the share price soften some 2.5%.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

Though if you're not interested in researching what drove EMSTEEL's performance, we have a free list of interesting investing ideas to potentially inspire your next investment!

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

We know that Arkan Building Materials Company (ARKAN) PJSC has been profitable in the past. However, it made a loss in the last twelve months, suggesting profit may be an unreliable metric at this stage. So it might be better to look at other metrics to try to understand the share price.

It could be that the revenue growth of 79% per year is viewed as evidence that Arkan Building Materials Company (ARKAN) PJSC is growing. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder's faith in better days ahead will be rewarded.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
ADX:EMSTEEL Earnings and Revenue Growth September 3rd 2022

This free interactive report on Arkan Building Materials Company (ARKAN) PJSC's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Arkan Building Materials Company (ARKAN) PJSC shareholders are down 30% for the year, but the market itself is up 26%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 13% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for Arkan Building Materials Company (ARKAN) PJSC that you should be aware of.

We will like Arkan Building Materials Company (ARKAN) PJSC better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

Valuation is complex, but we're helping make it simple.

Find out whether Arkan Building Materials Company (ARKAN) PJSC is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About ADX:EMSTEEL

Arkan Building Materials Company (ARKAN) PJSC

Arkan Building Materials Company (ARKAN) PJSC engages in the manufacture and sale of building and construction products in the United Arab Emirates.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth0
Past Performance0
Financial Health6
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Flawless balance sheet and fair value.