Beyond Lackluster Earnings: Potential Concerns For Arriyadh Development's (TADAWUL:4150) Shareholders

Arriyadh Development Co.'s (TADAWUL:4150) stock wasn't much affected by its recent lackluster earnings numbers. We did some digging, and we believe that investors are missing some worrying factors underlying the profit figures.

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To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. In fact, Arriyadh Development increased the number of shares on issue by 32% over the last twelve months by issuing new shares. As a result, its net income is now split between a greater number of shares. Per share metrics like EPS help us understand how much actual shareholders are benefitting from the company's profits, while the net income level gives us a better view of the company's absolute size. You can see a chart of Arriyadh Development's EPS by clicking here.

How Is Dilution Impacting Arriyadh Development's Earnings Per Share (EPS)?

Unfortunately, Arriyadh Development's profit is down 23% per year over three years. And even focusing only on the last twelve months, we see profit is down 14%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 17% in the same period. Therefore, one can observe that the dilution is having a fairly profound effect on shareholder returns.

If Arriyadh Development's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. For the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

The Impact Of Unusual Items On Profit

Alongside that dilution, it's also important to note that Arriyadh Development's profit was boosted by unusual items worth ر.س32m in the last twelve months. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. Arriyadh Development had a rather significant contribution from unusual items relative to its profit to March 2025. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Our Take On Arriyadh Development's Profit Performance

To sum it all up, Arriyadh Development got a nice boost to profit from unusual items; without that, its statutory results would have looked worse. On top of that, the dilution means that its earnings per share performance is worse than its profit performance. For the reasons mentioned above, we think that a perfunctory glance at Arriyadh Development's statutory profits might make it look better than it really is on an underlying level. If you'd like to know more about Arriyadh Development as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Arriyadh Development and you'll want to know about it.

In this article we've looked at a number of factors that can impair the utility of profit numbers, and we've come away cautious. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.