Earnings grew faster than the respectable 77% return delivered to Al-Baha Investment and Development (TADAWUL:4130) shareholders over the last year

It might be of some concern to shareholders to see the Al-Baha Investment and Development Company (TADAWUL:4130) share price down 21% in the last month. But looking back over the last year, the returns have actually been rather pleasing! After all, the share price is up a market-beating 77% in that time.

In light of the stock dropping 13% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the last year Al-Baha Investment and Development grew its earnings per share (EPS) by 232%. It's fair to say that the share price gain of 77% did not keep pace with the EPS growth. So it seems like the market has cooled on Al-Baha Investment and Development, despite the growth. Interesting. Having said that, the market is still optimistic, given the P/E ratio of 68.20.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It might be well worthwhile taking a look at our free report on Al-Baha Investment and Development's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Al-Baha Investment and Development shareholders have received a total shareholder return of 77% over the last year. That gain is better than the annual TSR over five years, which is 17%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Al-Baha Investment and Development has 2 warning signs (and 1 which is potentially serious) we think you should know about.

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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.