Do Aldrees Petroleum and Transport Services's (TADAWUL:4200) Earnings Warrant Your Attention?

Published
June 03, 2022
SASE:4200
Source: Shutterstock

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. 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.

In contrast to all that, I prefer to spend time on companies like Aldrees Petroleum and Transport Services (TADAWUL:4200), which has not only revenues, but also profits. While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

View our latest analysis for Aldrees Petroleum and Transport Services

How Quickly Is Aldrees Petroleum and Transport Services Increasing Earnings Per Share?

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Who among us would not applaud Aldrees Petroleum and Transport Services's stratospheric annual EPS growth of 39%, compound, over the last three years? While that sort of growth rate isn't sustainable for long, it certainly catches my attention; like a crow with a sparkly stone.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Aldrees Petroleum and Transport Services maintained stable EBIT margins over the last year, all while growing revenue 92% to ر.س10b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

earnings-and-revenue-history
SASE:4200 Earnings and Revenue History June 3rd 2022

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future Aldrees Petroleum and Transport Services EPS 100% free.

Are Aldrees Petroleum and Transport Services Insiders Aligned With All Shareholders?

I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. As a result, I'm encouraged by the fact that insiders own Aldrees Petroleum and Transport Services shares worth a considerable sum. Given insiders own a small fortune of shares, currently valued at ر.س220m, they have plenty of motivation to push the business to succeed. This should keep them focused on creating long term value for shareholders.

Does Aldrees Petroleum and Transport Services Deserve A Spot On Your Watchlist?

Aldrees Petroleum and Transport Services's earnings per share have taken off like a rocket aimed right at the moon. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So to my mind Aldrees Petroleum and Transport Services is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Even so, be aware that Aldrees Petroleum and Transport Services is showing 1 warning sign in our investment analysis , you should know about...

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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About SASE:4200

Aldrees Petroleum and Transport Services

Aldrees Petroleum and Transport Services Company engages in the wholesale and retail of fuel, gasoline, and oil in the Kingdom of Saudi Arabia.

High growth potential with proven track record and pays a dividend.