Imagine Owning MetLife American International Group and Arab National Bank Cooperative Insurance (TADAWUL:8011) And Trying To Stomach The 80% Share Price Drop

MetLife, American International Group and Arab National Bank Cooperative Insurance Company (TADAWUL:8011) shareholders will doubtless be very grateful to see the share price up 46% in the last quarter. But that can’t change the reality that over the longer term (five years), the returns have been really quite dismal. In that time the share price has delivered a rude shock to holders, who find themselves down 80% after a long stretch. So is the recent increase sufficient to restore confidence in the stock? Not yet. However, in the best case scenario (far from fait accompli), this improved performance might be sustained.

View our latest analysis for MetLife American International Group and Arab National Bank Cooperative Insurance

MetLife American International Group and Arab National Bank Cooperative Insurance isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.

Over five years, MetLife American International Group and Arab National Bank Cooperative Insurance grew its revenue at 31% per year. That’s well above most other pre-profit companies. So it’s not at all clear to us why the share price sunk 27% throughout that time. You’d have to assume the market is worried that profits won’t come soon enough. We’d recommend carefully checking for indications of future growth – and balance sheet threats – before considering a purchase.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

SASE:8011 Income Statement, January 17th 2020
SASE:8011 Income Statement, January 17th 2020

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What about the Total Shareholder Return (TSR)?

We’d be remiss not to mention the difference between MetLife American International Group and Arab National Bank Cooperative Insurance’s total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. We note that MetLife American International Group and Arab National Bank Cooperative Insurance’s TSR, at -66% is higher than its share price return of -80%. When you consider it hasn’t been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.

A Different Perspective

Investors in MetLife American International Group and Arab National Bank Cooperative Insurance had a tough year, with a total loss of 3.9%, against a market gain of about 0.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 19% doled out over the last five years. We’d need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It’s always interesting to track share price performance over the longer term. But to understand MetLife American International Group and Arab National Bank Cooperative Insurance better, we need to consider many other factors. For instance, we’ve identified 2 warning signs for MetLife American International Group and Arab National Bank Cooperative Insurance that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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 spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.