Despite delivering investors losses of 24% over the past 1 year, Dar Al Arkan Real Estate Development (TADAWUL:4300) has been growing its earnings

The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Dar Al Arkan Real Estate Development Company (TADAWUL:4300) share price slid 24% over twelve months. That's disappointing when you consider the market declined 3.8%. The silver lining (for longer term investors) is that the stock is still 18% higher than it was three years ago. The falls have accelerated recently, with the share price down 13% in the last three months. But this could be related to the weak market, which is down 7.9% in the same period.

The recent uptick of 4.3% could be a positive sign of things to come, so let's take a look at historical fundamentals.

View our latest analysis for Dar Al Arkan Real Estate Development

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During the unfortunate twelve months during which the Dar Al Arkan Real Estate Development share price fell, it actually saw its earnings per share (EPS) improve by 91%. It could be that the share price was previously over-hyped.

It's surprising to see the share price fall so much, despite the improved EPS. But we might find some different metrics explain the share price movements better.

In contrast, the 8.6% drop in revenue is a real concern. If the market sees the weak revenue as jeopardising EPS, that could explain the lower share price.

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

It is of course excellent to see how Dar Al Arkan Real Estate Development has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Dar Al Arkan Real Estate Development stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Dar Al Arkan Real Estate Development shareholders are down 24% for the year. Unfortunately, that's worse than the broader market decline of 3.8%. 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. Longer term investors wouldn't be so upset, since they would have made 0.4%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before forming an opinion on Dar Al Arkan Real Estate Development you might want to consider these 3 valuation metrics.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Saudi exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com