SAL Saudi Logistics Services Company (TADAWUL:4263) Stocks Pounded By 31% But Not Lagging Market On Growth Or Pricing

The SAL Saudi Logistics Services Company (TADAWUL:4263) share price has fared very poorly over the last month, falling by a substantial 31%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 32% share price drop.

In spite of the heavy fall in price, you could still be forgiven for feeling indifferent about SAL Saudi Logistics Services' P/E ratio of 23.7x, since the median price-to-earnings (or "P/E") ratio in Saudi Arabia is also close to 22x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

With earnings growth that's superior to most other companies of late, SAL Saudi Logistics Services has been doing relatively well. One possibility is that the P/E is moderate because investors think this strong earnings performance might be about to tail off. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

Check out our latest analysis for SAL Saudi Logistics Services

Keen to find out how analysts think SAL Saudi Logistics Services' future stacks up against the industry? In that case, our free report is a great place to start.

Is There Some Growth For SAL Saudi Logistics Services?

There's an inherent assumption that a company should be matching the market for P/E ratios like SAL Saudi Logistics Services' to be considered reasonable.

Retrospectively, the last year delivered an exceptional 30% gain to the company's bottom line. The strong recent performance means it was also able to grow EPS by 82% in total over the last three years. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Looking ahead now, EPS is anticipated to climb by 12% each year during the coming three years according to the three analysts following the company. That's shaping up to be similar to the 13% per annum growth forecast for the broader market.

In light of this, it's understandable that SAL Saudi Logistics Services' P/E sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Bottom Line On SAL Saudi Logistics Services' P/E

SAL Saudi Logistics Services' plummeting stock price has brought its P/E right back to the rest of the market. It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that SAL Saudi Logistics Services maintains its moderate P/E off the back of its forecast growth being in line with the wider market, as expected. At this stage investors feel the potential for an improvement or deterioration in earnings isn't great enough to justify a high or low P/E ratio. It's hard to see the share price moving strongly in either direction in the near future under these circumstances.

The company's balance sheet is another key area for risk analysis. Our free balance sheet analysis for SAL Saudi Logistics Services with six simple checks will allow you to discover any risks that could be an issue.

You might be able to find a better investment than SAL Saudi Logistics Services. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.