Chubb Arabia Cooperative Insurance (TADAWUL:8240) shareholders notch a 30% CAGR over 5 years, yet earnings have been shrinking

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, if you buy shares in a high quality company at the right price, you can gain well over 100%. One great example is Chubb Arabia Cooperative Insurance Company (TADAWUL:8240) which saw its share price drive 273% higher over five years. And in the last month, the share price has gained 18%.

The past week has proven to be lucrative for Chubb Arabia Cooperative Insurance investors, so let's see if fundamentals drove the company's five-year performance.

View our latest analysis for Chubb Arabia Cooperative Insurance

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Chubb Arabia Cooperative Insurance's earnings per share are down 11% per year, despite strong share price performance over five years.

This means it's unlikely the market is judging the company based on earnings growth. 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.

In contrast revenue growth of 13% per year is probably viewed as evidence that Chubb Arabia Cooperative Insurance is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling Chubb Arabia Cooperative Insurance stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that Chubb Arabia Cooperative Insurance has rewarded shareholders with a total shareholder return of 53% in the last twelve months. That's better than the annualised return of 30% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for Chubb Arabia Cooperative Insurance that you should be aware of before investing here.

But note: Chubb Arabia Cooperative Insurance may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.