Stock Analysis

If You Had Bought Gulf Union Cooperative Insurance (TADAWUL:8120) Stock A Year Ago, You Could Pocket A 55% Gain Today

SASE:8120
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Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Gulf Union Cooperative Insurance Co. (TADAWUL:8120) share price is up 55% in the last year, clearly besting the market return of around 0.7% (not including dividends). So that should have shareholders smiling. However, the stock hasn't done so well in the longer term, with the stock only up 23% in three years.

View our latest analysis for Gulf Union Cooperative Insurance

Gulf Union Cooperative Insurance 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year Gulf Union Cooperative Insurance saw its revenue grow by 60%. That's a head and shoulders above most loss-making companies. While the share price gain of 55% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. So quite frankly it could be a good time to investigate Gulf Union Cooperative Insurance in some detail. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

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SASE:8120 Earnings and Revenue Growth December 29th 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.

A Different Perspective

It's good to see that Gulf Union Cooperative Insurance has rewarded shareholders with a total shareholder return of 55% in the last twelve months. That's better than the annualised return of 4% 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. 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. Even so, be aware that Gulf Union Cooperative Insurance is showing 2 warning signs in our investment analysis , you should know about...

Of course Gulf Union Cooperative Insurance 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.

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Valuation is complex, but we're helping make it simple.

Find out whether Gulf Union Alahlia Cooperative Insurance is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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. 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.
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