The total return for Yamama Saudi Cement (TADAWUL:3020) investors has risen faster than earnings growth over the last five years

Yamama Saudi Cement Company (TADAWUL:3020) shareholders might be concerned after seeing the share price drop 11% in the last quarter. On the bright side the share price is up over the last half decade. However we are not very impressed because the share price is only up 66%, less than the market return of 67%.

While the stock has fallen 5.5% this week, it’s worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

View our latest analysis for Yamama Saudi Cement

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 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.

Over half a decade, Yamama Saudi Cement managed to grow its earnings per share at 10% a year. This EPS growth is remarkably close to the 11% average annual increase in the share price. That suggests that the market sentiment around the company hasn’t changed much over that time. In fact, the share price seems to largely reflect the EPS growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into Yamama Saudi Cement’s key metrics by checking this interactive graph of Yamama Saudi Cement’s earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We’ve already covered Yamama Saudi Cement’s share price action, but we should also mention its total shareholder return (TSR). 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. Its history of dividend payouts mean that Yamama Saudi Cement’s TSR of 71% over the last 5 years is better than the share price return.

A Different Perspective

Yamama Saudi Cement provided a TSR of 0.8% over the last twelve months. Unfortunately this falls short of the market return. If we look back over five years, the returns are even better, coming in at 11% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We’ve spotted 1 warning sign for Yamama Saudi Cement you should be aware of.

Of course Yamama Saudi Cement may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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. 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.