Do Saudi National Bank's (TADAWUL:1180) Earnings Warrant Your Attention?

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. 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 National Bank (TADAWUL:1180). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Saudi National Bank with the means to add long-term value to shareholders.

See our latest analysis for Saudi National Bank

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

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. Saudi National Bank has grown its trailing twelve month EPS from ر.س3.38 to ر.س3.66, in the last year. That amounts to a small improvement of 8.5%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Our analysis has highlighted that Saudi National 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. Saudi National Bank maintained stable EBIT margins over the last year, all while growing revenue 30% to ر.س30b. That's progress.

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.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Saudi National Bank's future profits.

Are Saudi National Bank Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a ر.س212b company like Saudi National Bank. But we are reassured by the fact they have invested in the company. To be specific, they have ر.س112m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Even though that's only about 0.05% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. A brief analysis of the CEO compensation suggests they are. The median total compensation for CEOs of companies similar in size to Saudi National Bank, with market caps over ر.س30b, is around ر.س2.4m.

The Saudi National Bank CEO received total compensation of just ر.س688k in the year to December 2021. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.

Does Saudi National Bank Deserve A Spot On Your Watchlist?

One positive for Saudi National Bank is that it is growing EPS. That's nice to see. The growth of EPS may be the eye-catching headline for Saudi National Bank, but there's more to bring joy for shareholders. With company insiders aligning themselves considerably with the company's success and modest CEO compensation, there's no arguments that this is a stock worth looking into. You still need to take note of risks, for example - Saudi National Bank has 1 warning sign we think you should be aware of.

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

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.