The five-year decline in earnings for Al Khaleej Training and Education TADAWUL:4290) isn't encouraging, but shareholders are still up 226% over that period

The Al Khaleej Training and Education Company (TADAWUL:4290) share price has had a bad week, falling 11%. But that doesn't change the fact that shareholders have received really good returns over the last five years. In fact, the share price is 157% higher today. We think it's more important to dwell on the long term returns than the short term returns. Only time will tell if there is still too much optimism currently reflected in the share price.

While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

See our latest analysis for Al Khaleej Training and Education

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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 last half decade, Al Khaleej Training and Education became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into Al Khaleej Training and Education's key metrics by checking this interactive graph of Al Khaleej Training and Education's earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Al Khaleej Training and Education's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Al Khaleej Training and Education's TSR of 226% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's good to see that Al Khaleej Training and Education has rewarded shareholders with a total shareholder return of 114% in the last twelve months. That's better than the annualised return of 27% 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. It's always interesting to track share price performance over the longer term. But to understand Al Khaleej Training and Education better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Al Khaleej Training and Education you should be aware of, and 2 of them are potentially serious.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.