Jabal Omar Development (TADAWUL:4250) shareholders have lost 10% over 3 years, earnings decline likely the culprit

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. By comparison, an individual stock is unlikely to match market returns - and could well fall short. Unfortunately, that's been the case for longer term Jabal Omar Development Company (TADAWUL:4250) shareholders, since the share price is down 10% in the last three years, less than the market decline of around 9.3%.

If the past week is anything to go by, investor sentiment for Jabal Omar Development isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

We've discovered 2 warning signs about Jabal Omar Development. View them for free.

Given that Jabal Omar Development only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

Over three years, Jabal Omar Development grew revenue at 48% per year. That is faster than most pre-profit companies. The share price drop of 3% per year over three years would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. It's possible that the prior share price assumed unrealistically high future growth. Before considering a purchase, investors should consider how quickly expenses are growing, relative to revenue.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

If you are thinking of buying or selling Jabal Omar Development stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While it's certainly disappointing to see that Jabal Omar Development shares lost 3.6% throughout the year, that wasn't as bad as the market loss of 6.7%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 0.9% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Jabal Omar Development better, we need to consider many other factors. Even so, be aware that Jabal Omar Development is showing 2 warning signs in our investment analysis , and 1 of those is significant...

We will like Jabal Omar Development better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.