If EPS Growth Is Important To You, Saudi Awwal Bank (TADAWUL:1060) Presents An Opportunity

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Saudi Awwal Bank (TADAWUL:1060). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Saudi Awwal Bank with the means to add long-term value to shareholders.

See our latest analysis for Saudi Awwal Bank

How Fast Is Saudi Awwal Bank Growing Its Earnings Per Share?

In the last three years Saudi Awwal Bank's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. Outstandingly, Saudi Awwal Bank's EPS shot from ر.س1.67 to ر.س2.98, over the last year. Year on year growth of 78% is certainly a sight to behold. The best case scenario? That the business has hit a true inflection point.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Our analysis has highlighted that Saudi Awwal Bank's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. EBIT margins for Saudi Awwal Bank remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 49% to ر.س11b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Saudi Awwal Bank's future EPS 100% free.

Are Saudi Awwal Bank Insiders Aligned With All Shareholders?

Owing to the size of Saudi Awwal Bank, we wouldn't expect insiders to hold a significant proportion of the company. But we are reassured by the fact they have invested in the company. We note that their impressive stake in the company is worth ر.س1.7b. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Is Saudi Awwal Bank Worth Keeping An Eye On?

Saudi Awwal Bank's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering Saudi Awwal Bank for a spot on your watchlist. Even so, be aware that Saudi Awwal Bank is showing 1 warning sign in our investment analysis , you should know about...

Although Saudi Awwal Bank certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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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.