Al Rajhi Company for Cooperative Insurance's (TADAWUL:8230) five-year earnings growth trails the incredible shareholder returns

Al Rajhi Company for Cooperative Insurance (TADAWUL:8230) shareholders might be concerned after seeing the share price drop 23% in the last quarter. But over five years returns have been remarkably great. Indeed, the share price is up a whopping 544% in that time. Arguably, the recent fall is to be expected after such a strong rise. But the real question is whether the business fundamentals can improve over the long term. It really delights us to see such great share price performance for investors.

Since the stock has added ر.س1.1b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

We've discovered 1 warning sign about Al Rajhi Company for Cooperative Insurance. View them for free.

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over half a decade, Al Rajhi Company for Cooperative Insurance managed to grow its earnings per share at 31% a year. This EPS growth is slower than the share price growth of 45% per year, over the same period. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth.

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

It might be well worthwhile taking a look at our free report on Al Rajhi Company for Cooperative Insurance's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Al Rajhi Company for Cooperative Insurance has rewarded shareholders with a total shareholder return of 30% in the last twelve months. However, that falls short of the 45% TSR per annum it has made for shareholders, each year, over five years. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. 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. For example, we've discovered 1 warning sign for Al Rajhi Company for Cooperative Insurance that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.