Is Al-Etihad Cooperative Insurance's (TADAWUL:8170) 210% Share Price Increase Well Justified?

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, you can make far more than 100% on a really good stock. For example, the Al-Etihad Cooperative Insurance Co. (TADAWUL:8170) share price has soared 210% in the last half decade. Most would be very happy with that. Also pleasing for shareholders was the 28% gain in the last three months.

See our latest analysis for Al-Etihad Cooperative Insurance

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Al-Etihad Cooperative Insurance achieved compound earnings per share (EPS) growth of 25% per year. This EPS growth is remarkably close to the 25% average annual increase in the share price. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Rather, the share price has approximately tracked EPS growth.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into Al-Etihad Cooperative Insurance's key metrics by checking this interactive graph of Al-Etihad Cooperative Insurance's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Al-Etihad Cooperative Insurance has rewarded shareholders with a total shareholder return of 62% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 25% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Al-Etihad Cooperative Insurance better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Al-Etihad Cooperative Insurance you should be aware of, and 1 of them can't be ignored.

We will like Al-Etihad Cooperative Insurance better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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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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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