Zain Saudi Arabia Shareholders See Losses Despite Profit Surge
▼ Summary
– The company’s share price fell 39% over five years despite 4.5% average annual EPS growth, indicating earlier market expectations were likely too high.
– Total shareholder return over five years was -12%, which is better than the share price return alone due to the positive impact of dividend payments.
– Recent performance shows improvement, with a total shareholder return of 1.8% over the past year.
– The market has not fully rewarded the company’s steady earnings, possibly due to broader market conditions or investor caution.
– The evolving Saudi telecom market necessitates continued monitoring of the company’s growth prospects and associated risks.
Shareholders of Zain Saudi Arabia have experienced a significant divergence between the company’s financial performance and its stock market valuation over a five-year period. Despite a consistent increase in earnings per share, averaging 4.5% each year, the share price has actually fallen by 39%. This situation points to a market that may have initially been too optimistic, with subsequent performance failing to meet those heightened expectations.
The picture looks somewhat better when accounting for the dividends the company has reliably distributed. The total shareholder return, which includes these dividend payments, comes in at -12% over the same five years. This figure, while still negative, is notably less severe than the share price return alone. More recently, there are glimmers of a potential turnaround. Over the last twelve months, the TSR has moved into positive territory, registering a 1.8% gain.
Market analysts observe that the market has been slow to fully value the company’s steady earnings. This hesitation could be attributed to broader economic conditions in Saudi Arabia or a general sense of investor caution. As the nation’s telecommunications sector continues to develop at a rapid pace, keeping a close watch on Zain’s growth trajectory and any associated risks will be essential for understanding its future direction.
(Source: MEA Tech Watch)