{"id":540,"date":"2020-04-18T09:59:00","date_gmt":"2020-04-18T09:59:00","guid":{"rendered":"http:\/\/razeen.local\/blog\/%d8%b1%d8%a8%d8%ad-%d8%a7%d9%84%d8%b3%d9%87%d9%85-%d9%8a%d8%b9%d8%aa%d8%a8%d8%b1-%d9%85%d8%a4%d8%b4%d8%b1-%d8%b1%d8%a6%d9%8a%d8%b3%d9%8a-%d9%84%d9%84%d9%82%d9%8a%d9%85%d8%a9-%d8%a7%d9%84%d8%b3%d9%88\/"},"modified":"2023-05-17T12:44:30","modified_gmt":"2023-05-17T12:44:30","slug":"%d8%b1%d8%a8%d8%ad-%d8%a7%d9%84%d8%b3%d9%87%d9%85-%d9%8a%d8%b9%d8%aa%d8%a8%d8%b1-%d9%85%d8%a4%d8%b4%d8%b1-%d8%b1%d8%a6%d9%8a%d8%b3%d9%8a-%d9%84%d9%84%d9%82%d9%8a%d9%85%d8%a9-%d8%a7%d9%84%d8%b3%d9%88","status":"publish","type":"blog","link":"https:\/\/razeencapital.sa\/en\/blog\/%d8%b1%d8%a8%d8%ad-%d8%a7%d9%84%d8%b3%d9%87%d9%85-%d9%8a%d8%b9%d8%aa%d8%a8%d8%b1-%d9%85%d8%a4%d8%b4%d8%b1-%d8%b1%d8%a6%d9%8a%d8%b3%d9%8a-%d9%84%d9%84%d9%82%d9%8a%d9%85%d8%a9-%d8%a7%d9%84%d8%b3%d9%88\/","title":{"rendered":"Earnings per share is a leading indicator of the market value of the share price"},"content":{"rendered":"\n

It is well known in the financial markets that stock prices are controlled by multiple factors, including financial and fundamental, and the behavior of traders, but what really drives prices is the expectations of growth in the annual profits of the company represented in the profit per share and the amount of dividends, followed by the assets owned by the company, especially if its market value is higher than book, in addition to the availability of alternative opportunities for investors, whether inside or outside the market.<\/p>\n\n\n

\n
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Historical data for Saudi Cement stock compared to earnings per share since 2014<\/figcaption><\/figure>\n<\/div>\n\n\n

For example, it is noted that the price trend of Saudi cement has been affected by changes in the volume of earnings per share year after year since 2014. During the year 2014 AD, the share achieved new high prices, and it became clear later that it was a reflection of the share\u2019s evaluation with the profits of the same year, at a value of 7.02 riyals per share. In the following year, during 2015, the share price began to decline (the decline intensified due to the general market decline), due to the investors\u2019 early expectation of the share profit for the same year, which was announced later at a value of 2 riyals. In the following year 2016 AD, the share price consolidated and returned to the rise, and then it became clear at the end of the year that the profit per share increased to 5.89 riyals, followed in the following year by the return of the share to decline in 2017 AD in interaction with the decrease in the profit per share at the end of the year to become 2.96 riyals.<\/p>\n\n\n\n

During the year 2019 AD, the stock rose again, due to the investors\u2019 expectation of an increase in the profit per share, which happened at the end of the year when it announced a profit for the year at a value of 2.95 riyals. And now, during the current year 2020 AD, we are witnessing a sharp decline in the share as a result of investors\u2019 expectations that the company\u2019s profits will be negatively affected, which will subsequently lead to a decrease in the share profit to less than 2.95 riyals, and thus a decrease in dividends as well.<\/p>\n\n\n\n

This example model was used here for clarification, but it is not necessary that the relationship be direct between the share price and the share profit, as we have seen. Some companies are evaluated by investors differently, especially when they own assets that have a high market value, which makes them evaluate the share price by liquidation method and in isolation from the value of the share profit temporarily. .<\/p>\n\n\n\n

But in the end, earnings per share remains the main and sustainable driver of share price fluctuations, and annual share earnings information can be accessed through the company\u2019s annual financial report in the income statement section, and it can be downloaded from the Tadawul website or the company\u2019s website itself. (see attached example)<\/p>\n\n\n

\n
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The income statement page in the annual financial report of a Saudi company during the year 2019<\/figcaption><\/figure>\n<\/div>","protected":false},"featured_media":387,"template":"","tags":[],"class_list":["post-540","blog","type-blog","status-publish","has-post-thumbnail","hentry"],"yoast_head":"\nEarnings per share is a leading indicator of the market value of the share price - Razeen Capital - \u0631\u0632\u064a\u0646 \u0627\u0644\u0645\u0627\u0644\u064a\u0629<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/razeencapital.sa\/en\/blog\/\u0631\u0628\u062d-\u0627\u0644\u0633\u0647\u0645-\u064a\u0639\u062a\u0628\u0631-\u0645\u0624\u0634\u0631-\u0631\u0626\u064a\u0633\u064a-\u0644\u0644\u0642\u064a\u0645\u0629-\u0627\u0644\u0633\u0648\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Earnings per share is a leading indicator of the market value of the share price - 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