15% earnings growth over 3 years has not materialized into gains for Arabia Insurance Cooperative (TADAWUL:8160) shareholders over that period

Investing in stocks inevitably means buying into some companies that perform poorly. Long term Arabia Insurance Cooperative Company (TADAWUL:8160) shareholders know that all too well, since the share price is down considerably over three years. So they might be feeling emotional about the 64% share price collapse, in that time. Furthermore, it's down 20% in about a quarter. That's not much fun for holders. Of course, this share price action may well have been influenced by the 9.3% decline in the broader market, throughout the period.

After losing 14% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Arabia Insurance Cooperative

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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).

Although the share price is down over three years, Arabia Insurance Cooperative actually managed to grow EPS by 52% per year in that time. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We note that, in three years, revenue has actually grown at a 39% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating Arabia Insurance Cooperative further; while we may be missing something on this analysis, there might also be an opportunity.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

This free interactive report on Arabia Insurance Cooperative's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Arabia Insurance Cooperative's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Arabia Insurance Cooperative hasn't been paying dividends, but its TSR of -60% exceeds its share price return of -64%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

While it's never nice to take a loss, Arabia Insurance Cooperative shareholders can take comfort that their trailing twelve month loss of 1.7% wasn't as bad as the market loss of around 7.4%. What is more upsetting is the 3% per annum loss investors have suffered over the last half decade. While the losses are slowing we doubt many shareholders are happy with the stock. Before forming an opinion on Arabia Insurance Cooperative you might want to consider these 3 valuation metrics.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com