Abdullah Al-Othaim Markets (TADAWUL:4001) stock falls 4.2% in past week as five-year earnings and shareholder returns continue downward trend

Ideally, your overall portfolio should beat the market average. But even the best stock picker will only win with some selections. At this point some shareholders may be questioning their investment in Abdullah Al-Othaim Markets Company (TADAWUL:4001), since the last five years saw the share price fall 45%. We also note that the stock has performed poorly over the last year, with the share price down 39%. More recently, the share price has dropped a further 12% in a month. But this could be related to poor market conditions -- stocks are down 7.5% in the same time.

After losing 4.2% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the five years over which the share price declined, Abdullah Al-Othaim Markets' earnings per share (EPS) dropped by 0.5% each year. This reduction in EPS is less than the 11% annual reduction in the share price. This implies that the market is more cautious about the business these days.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into Abdullah Al-Othaim Markets' key metrics by checking this interactive graph of Abdullah Al-Othaim Markets's earnings, revenue and cash flow.

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. We note that for Abdullah Al-Othaim Markets the TSR over the last 5 years was -27%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We regret to report that Abdullah Al-Othaim Markets shareholders are down 35% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 7.7%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. To that end, you should learn about the 2 warning signs we've spotted with Abdullah Al-Othaim Markets (including 1 which can't be ignored) .

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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 Saudi 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.