Even though Saudi Paper Manufacturing (TADAWUL:2300) has lost ر.س123m market cap in last 7 days, shareholders are still up 209% over 3 years

By
Simply Wall St
Published
November 12, 2021
SASE:2300
Source: Shutterstock

It hasn't been the best quarter for Saudi Paper Manufacturing Company (TADAWUL:2300) shareholders, since the share price has fallen 14% in that time. In contrast the stock is up over the last three years. In that time, it is up 63%, which isn't bad, but not amazing either.

Although Saudi Paper Manufacturing has shed ر.س123m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Check out our latest analysis for Saudi Paper Manufacturing

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. 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 three years of share price growth, Saudi Paper Manufacturing moved from a loss to profitability. That would generally be considered a positive, so we'd expect the share price to be up.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
SASE:2300 Earnings Per Share Growth November 13th 2021

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Saudi Paper Manufacturing'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. Its history of dividend payouts mean that Saudi Paper Manufacturing's TSR of 209% over the last 3 years is better than the share price return.

A Different Perspective

We're pleased to report that Saudi Paper Manufacturing shareholders have received a total shareholder return of 33% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 17% 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. 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. For example, we've discovered 2 warning signs for Saudi Paper Manufacturing that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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