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Nass Petrol Factory Company's (TADAWUL:9609) Stock is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?

Simply Wall St · 2d ago

Nass Petrol Factory (TADAWUL:9609) has had a great run on the share market with its stock up by a significant 14% over the last week. However, we wonder if the company's inconsistent financials would have any adverse impact on the current share price momentum. In this article, we decided to focus on Nass Petrol Factory's ROE.

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Put another way, it reveals the company's success at turning shareholder investments into profits.

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How Is ROE Calculated?

The formula for return on equity is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for Nass Petrol Factory is:

7.8% = ر.س4.7m ÷ ر.س61m (Based on the trailing twelve months to June 2025).

The 'return' is the profit over the last twelve months. One way to conceptualize this is that for each SAR1 of shareholders' capital it has, the company made SAR0.08 in profit.

View our latest analysis for Nass Petrol Factory

Why Is ROE Important For Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.

A Side By Side comparison of Nass Petrol Factory's Earnings Growth And 7.8% ROE

It is hard to argue that Nass Petrol Factory's ROE is much good in and of itself. A comparison with the industry shows that the company's ROE is pretty similar to the average industry ROE of 6.9%. Given the low ROE Nass Petrol Factory's five year net income decline of 15% is not surprising.

As a next step, we compared Nass Petrol Factory's performance with the industry and found thatNass Petrol Factory's performance is depressing even when compared with the industry, which has shrunk its earnings at a rate of 11% in the same period, which is a slower than the company.

past-earnings-growth
SASE:9609 Past Earnings Growth December 23rd 2025

Earnings growth is an important metric to consider when valuing a stock. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. This then helps them determine if the stock is placed for a bright or bleak future. Is Nass Petrol Factory fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Nass Petrol Factory Making Efficient Use Of Its Profits?

Because Nass Petrol Factory doesn't pay any regular dividends, we infer that it is retaining all of its profits, which is rather perplexing when you consider the fact that there is no earnings growth to show for it. So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds.

Summary

In total, we're a bit ambivalent about Nass Petrol Factory's performance. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. You can see the 4 risks we have identified for Nass Petrol Factory by visiting our risks dashboard for free on our platform here.