Those who invested in Dar Al Arkan Real Estate Development (TADAWUL:4300) five years ago are up 171%

While Dar Al Arkan Real Estate Development Company (TADAWUL:4300) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 13% in the last quarter. But in stark contrast, the returns over the last half decade have impressed. In fact, the share price is 171% higher today. Generally speaking the long term returns will give you a better idea of business quality than short periods can. Ultimately business performance will determine whether the stock price continues the positive long term trend.

So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.

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While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 five years of share price growth, Dar Al Arkan Real Estate Development achieved compound earnings per share (EPS) growth of 24% per year. This EPS growth is reasonably close to the 22% average annual increase in the share price. This indicates that investor sentiment towards the company has not changed a great deal. Indeed, it would appear the share price is reacting to the EPS.

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

We know that Dar Al Arkan Real Estate Development has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Dar Al Arkan Real Estate Development's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Dar Al Arkan Real Estate Development shareholders have received a total shareholder return of 62% over the last year. That's better than the annualised return of 22% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before forming an opinion on Dar Al Arkan Real Estate Development you might want to consider these 3 valuation metrics.

We will like Dar Al Arkan Real Estate 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.