Shareholders Of Saudi Real Estate (TADAWUL:4020) Must Be Happy With Their 103% Total Return

Stock pickers are generally looking for stocks that will outperform the broader market. Buying under-rated businesses is one path to excess returns. To wit, the Saudi Real Estate share price has climbed 80% in five years, easily topping the market return of 50% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 8.4% in the last year.

View our latest analysis for Saudi Real Estate

Saudi Real Estate isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last 5 years Saudi Real Estate saw its revenue grow at 4.5% per year. Put simply, that growth rate fails to impress. The modest growth is probably broadly reflected in the share price, which is up 13%, per year over 5 years. We'd be looking for the underlying business to grow revenue a bit faster.

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

Take a more thorough look at Saudi Real Estate's financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Saudi Real Estate's total shareholder return (TSR) and its share price return. 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 Real Estate shareholders, and that cash payout contributed to why its TSR of 103%, over the last 5 years, is better than the share price return.

A Different Perspective

Saudi Real Estate shareholders are up 8.4% for the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 15% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Saudi Real Estate has 2 warning signs we think you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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

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This article by Simply Wall St is general in nature. 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.
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