The three-year decline in earnings might be taking its toll on Baladna Q.P.S.C (DSM:BLDN) shareholders as stock falls 6.4% over the past week

By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, Baladna Q.P.S.C. (DSM:BLDN) shareholders have seen the share price rise 16% over three years, well in excess of the market return (8.5%, not including dividends).

Since the long term performance has been good but there's been a recent pullback of 6.4%, let's check if the fundamentals match the share price.

Check out our latest analysis for Baladna Q.P.S.C

SWOT Analysis for Baladna Q.P.S.C

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 the three years of share price growth, Baladna Q.P.S.C actually saw its earnings per share (EPS) drop 20% per year.

The strong decline in earnings per share suggests the market isn't using EPS to judge the company. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

The revenue drop of is as underwhelming as some politicians. The only thing that's clear is there is low correlation between Baladna Q.P.S.C's share price and its historic fundamental data. Further research may be required!

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 The Total Shareholder Return (TSR)?

We've already covered Baladna Q.P.S.C's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Baladna Q.P.S.C shareholders, and that cash payout contributed to why its TSR of 23%, over the last 3 years, is better than the share price return.

A Different Perspective

Baladna Q.P.S.C shareholders may not have made money over the last year, but their total loss of 1.8% isn't as bad as the market loss of around 1.8%. Shareholders who have held for three years might be relatively sanguine about the recent weakness, given they have made 7% per year for three years. It's possible that the recent share price decline has more to do with the negative broader market returns than any company specific development. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Baladna Q.P.S.C (of which 1 shouldn't be ignored!) you should know about.

But note: Baladna Q.P.S.C may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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