Al Rajhi Company for Cooperative Insurance (TADAWUL:8230) stock performs better than its underlying earnings growth over last five years

Long term investing can be life changing when you buy and hold the truly great businesses. While not every stock performs well, when investors win, they can win big. To wit, the Al Rajhi Company for Cooperative Insurance (TADAWUL:8230) share price has soared 592% over five years. If that doesn't get you thinking about long term investing, we don't know what will. It's even up 5.0% in the last week. We love happy stories like this one. The company should be really proud of that performance!

Since it's been a strong week for Al Rajhi Company for Cooperative Insurance shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Al Rajhi Company for Cooperative Insurance

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During five years of share price growth, Al Rajhi Company for Cooperative Insurance achieved compound earnings per share (EPS) growth of 30% per year. This EPS growth is lower than the 47% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This optimism is visible in its fairly high P/E ratio of 45.05.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We know that Al Rajhi Company for Cooperative Insurance has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

A Different Perspective

It's good to see that Al Rajhi Company for Cooperative Insurance has rewarded shareholders with a total shareholder return of 149% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 47% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before forming an opinion on Al Rajhi Company for Cooperative Insurance you might want to consider these 3 valuation metrics.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.