Positive earnings growth hasn't been enough to get Fawaz Abdulaziz Al Hokair (TADAWUL:4240) shareholders a favorable return over the last five years

Fawaz Abdulaziz Al Hokair & Company (TADAWUL:4240) shareholders will doubtless be very grateful to see the share price up 36% in the last quarter. But if you look at the last five years the returns have not been good. After all, the share price is down 46% in that time, significantly under-performing the market.

The recent uptick of 9.1% could be a positive sign of things to come, so let's take a look at historical fundamentals.

View our latest analysis for Fawaz Abdulaziz Al Hokair

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Fawaz Abdulaziz Al Hokair became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.

Revenue is actually up 2.3% over the time period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We know that Fawaz Abdulaziz Al Hokair has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Fawaz Abdulaziz Al Hokair stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that Fawaz Abdulaziz Al Hokair has rewarded shareholders with a total shareholder return of 24% in the last twelve months. Notably the five-year annualised TSR loss of 8% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Fawaz Abdulaziz Al Hokair (at least 2 which don't sit too well with us) , and understanding them should be part of your investment process.

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.