Stock Analysis

Ooredoo Q.P.S.C's (DSM:ORDS) Stock Price Has Reduced 22% In The Past Three Years

DSM:ORDS
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Ooredoo Q.P.S.C. (DSM:ORDS) shareholders should be happy to see the share price up 10% in the last month. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 22% in the last three years, significantly under-performing the market.

See our latest analysis for Ooredoo 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.

Although the share price is down over three years, Ooredoo Q.P.S.C actually managed to grow EPS by 0.1% 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's pretty reasonable to suspect the market was previously to bullish on the stock, and has since moderated expectations. Looking to other metrics might better explain the share price change.

Arguably the revenue decline of 3.8% per year has people thinking Ooredoo Q.P.S.C is shrinking. After all, if revenue keeps shrinking, it may be difficult to find earnings growth in the future.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
DSM:ORDS Earnings and Revenue Growth January 5th 2021

We know that Ooredoo Q.P.S.C has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Ooredoo Q.P.S.C

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. In the case of Ooredoo Q.P.S.C, it has a TSR of -12% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that Ooredoo Q.P.S.C shareholders have received a total shareholder return of 10% over the last year. That's including the dividend. That's better than the annualised return of 4% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 example, we've discovered 2 warning signs for Ooredoo Q.P.S.C (1 shouldn't be ignored!) that you should be aware of before investing here.

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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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This article by Simply Wall St is general in nature. 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.
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