Shareholders have faith in loss-making Tabuk Agricultural Development (TADAWUL:6040) as stock climbs 13% in past week, taking three-year gain to 200%

By
Simply Wall St
Published
September 11, 2021
SASE:6040
Source: Shutterstock

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Tabuk Agricultural Development Company (TADAWUL:6040) share price has soared 115% in the last three years. Most would be happy with that. Better yet, the share price has risen 13% in the last week.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

View our latest analysis for Tabuk Agricultural Development

Tabuk Agricultural Development wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Tabuk Agricultural Development saw its revenue grow at 17% per year. That's a very respectable growth rate. Broadly speaking, this solid progress may well be reflected by the healthy share price gain of 29% per year over three years. It's hard to value pre-profit businesses, but it seems like the market has become a lot more optimistic about this one! It would be worth thinking about when profits will flow, since that milestone will attract more attention.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
SASE:6040 Earnings and Revenue Growth September 12th 2021

If you are thinking of buying or selling Tabuk Agricultural Development stock, you should check out this FREE detailed report on its balance sheet.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Tabuk Agricultural Development's total shareholder return (TSR) and its share price change, which we've covered above. 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. Tabuk Agricultural Development's TSR of 200% for the 3 years exceeded its share price return, because it has paid dividends.

A Different Perspective

We're pleased to report that Tabuk Agricultural Development shareholders have received a total shareholder return of 74% over one year. That's better than the annualised return of 23% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. For example, we've discovered 3 warning signs for Tabuk Agricultural Development that you should be aware of before investing here.

Of course Tabuk Agricultural Development may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SA exchanges.

If you're looking for stocks to buy, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.