Emirates Integrated Telecommunications Company PJSC (DFM:DU) Has Compensated Shareholders With A Respectable 50% Return On Their Investment

One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. Just take a look at Emirates Integrated Telecommunications Company PJSC (DFM:DU), which is up 25%, over three years, soundly beating the market return of 1.3% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 7.3% in the last year , including dividends .

Check out our latest analysis for Emirates Integrated Telecommunications Company PJSC

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over the last three years, Emirates Integrated Telecommunications Company PJSC failed to grow earnings per share, which fell 5.5% (annualized).

So we doubt that the market is looking to EPS for its main judge of the company's value. Given this situation, it makes sense to look at other metrics too.

We doubt the dividend payments explain the share price rise, since we don't see any improvement in that regard. It could be that the revenue decline of 5.2% per year is viewed as evidence that Emirates Integrated Telecommunications Company PJSC is shrinking. If revenue keeps shrinking, it may be difficult to find earnings growth in the future.

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

This free interactive report on Emirates Integrated Telecommunications Company PJSC's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Emirates Integrated Telecommunications Company PJSC's TSR for the last 3 years was 50%, 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

Emirates Integrated Telecommunications Company PJSC shareholders are up 7.3% for the year (even including dividends). But that was short of the market average. If we look back over five years, the returns are even better, coming in at 8% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Emirates Integrated Telecommunications Company PJSC you should know about.

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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