If EPS Growth Is Important To You, Saudi National Bank (TADAWUL:1180) Presents An Opportunity

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Saudi National Bank's EPS skyrocketed from ر.س2.99 to ر.س4.06, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 36%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. 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 29% to ر.س31b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Saudi National Bank's forecast profits?

Are Saudi National Bank Insiders Aligned With All Shareholders?

Since Saudi National Bank has a market capitalisation of ر.س206b, we wouldn't expect insiders to hold a large percentage of shares. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. To be specific, they have ر.س100m worth of shares. This considerable investment should help drive long-term value in the business. 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. Well, based on the CEO pay, you'd argue that they are indeed. For companies with market capitalisations over ر.س30b, like Saudi National Bank, the median CEO pay is around ر.س3.0m.

Saudi National Bank's CEO took home a total compensation package of ر.س688k in the year prior to December 2021. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally.

Should You Add Saudi National Bank To Your Watchlist?

You can't deny that Saudi National Bank has grown its earnings per share at a very impressive rate. That's attractive. If you need more convincing beyond that EPS growth rate, don't forget about the reasonable remuneration and the high insider ownership. This may only be a fast rundown, but the key takeaway is that Saudi National Bank is worth keeping an eye on. You still need to take note of risks, for example - Saudi National Bank has 1 warning sign we think you should be aware of.

Although Saudi National 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.