Saudi Pharmaceutical Industries and Medical Appliances (TADAWUL:2070) adds ر.س422m to market cap in the past 7 days, though investors from five years ago are still down 8.0%

Saudi Pharmaceutical Industries and Medical Appliances Corporation (TADAWUL:2070) shareholders should be happy to see the share price up 15% in the last week. But if you look at the last five years the returns have not been good. After all, the share price is down 12% in that time, significantly under-performing the market.

The recent uptick of 15% could be a positive sign of things to come, so let's take a look at historical fundamentals.

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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 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.

Saudi Pharmaceutical Industries and Medical Appliances became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.

In contrast to the share price, revenue has actually increased by 2.4% a year in the five year period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Saudi Pharmaceutical Industries and Medical Appliances' total shareholder return (TSR) and its share price change, which we've covered above. 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. Dividends have been really beneficial for Saudi Pharmaceutical Industries and Medical Appliances shareholders, and that cash payout explains why its total shareholder loss of 8.0%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

While the broader market lost about 5.5% in the twelve months, Saudi Pharmaceutical Industries and Medical Appliances shareholders did even worse, losing 10%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.6% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Saudi Pharmaceutical Industries and Medical Appliances better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Saudi Pharmaceutical Industries and Medical Appliances you should be aware of, and 1 of them shouldn't be ignored.

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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.