Investing in Qatar National Bank (Q.P.S.C.) (DSM:QNBK) five years ago would have delivered you a 55% gain

July 20, 2022
  •  Updated
November 18, 2022
DSM:QNBK
Source: Shutterstock

While Qatar National Bank (Q.P.S.C.) (DSM:QNBK) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 19% in the last quarter. On the bright side the share price is up over the last half decade. Unfortunately its return of 32% is below the market return of 50%.

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

View our latest analysis for Qatar National Bank (Q.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. 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.

During five years of share price growth, Qatar National Bank (Q.P.S.C.) achieved compound earnings per share (EPS) growth of 0.2% per year. This EPS growth is slower than the share price growth of 6% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
DSM:QNBK Earnings Per Share Growth July 20th 2022

It might be well worthwhile taking a look at our free report on Qatar National Bank (Q.P.S.C.)'s earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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, Qatar National Bank (Q.P.S.C.)'s TSR for the last 5 years was 55%, 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

Qatar National Bank (Q.P.S.C.) shareholders gained a total return of 8.4% during the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 9% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand Qatar National Bank (Q.P.S.C.) better, we need to consider many other factors. For instance, we've identified 1 warning sign for Qatar National Bank (Q.P.S.C.) that you should be aware of.

We will like Qatar National Bank (Q.P.S.C.) 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 QA exchanges.

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