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SABIC Agri-Nutrients Company (TADAWUL:2020) Stock's Been Sliding But Fundamentals Look Decent: Will The Market Correct The Share Price In The Future?

Simply Wall St · 01/05 03:01

With its stock down 8.2% over the past three months, it is easy to disregard SABIC Agri-Nutrients (TADAWUL:2020). But if you pay close attention, you might find that its key financial indicators look quite decent, which could mean that the stock could potentially rise in the long-term given how markets usually reward more resilient long-term fundamentals. Specifically, we decided to study SABIC Agri-Nutrients' ROE in this article.

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.

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How To Calculate Return On Equity?

The formula for ROE is:

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

So, based on the above formula, the ROE for SABIC Agri-Nutrients is:

21% = ر.س4.4b ÷ ر.س21b (Based on the trailing twelve months to September 2025).

The 'return' is the profit over the last twelve months. So, this means that for every SAR1 of its shareholder's investments, the company generates a profit of SAR0.21.

Check out our latest analysis for SABIC Agri-Nutrients

What Has ROE Got To Do With Earnings Growth?

So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. 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.

SABIC Agri-Nutrients' Earnings Growth And 21% ROE

When you first look at it, SABIC Agri-Nutrients' ROE doesn't look that attractive. However, the fact that the its ROE is quite higher to the industry average of 6.9% doesn't go unnoticed by us. Yet, SABIC Agri-Nutrients has posted measly growth of 2.8% over the past five years. Remember, the company's ROE is quite low to begin with, just that it is higher than the industry average. Therefore, the low growth in earnings could also be the result of this.

Next, on comparing with the industry net income growth, we found that the growth figure reported by SABIC Agri-Nutrients compares quite favourably to the industry average, which shows a decline of 11% over the last few years.

past-earnings-growth
SASE:2020 Past Earnings Growth January 5th 2026

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 SABIC Agri-Nutrients fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is SABIC Agri-Nutrients Using Its Retained Earnings Effectively?

The high three-year median payout ratio of 81% (that is, the company retains only 19% of its income) over the past three years for SABIC Agri-Nutrients suggests that the company's earnings growth was lower as a result of paying out a majority of its earnings.

Moreover, SABIC Agri-Nutrients has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. Our latest analyst data shows that the future payout ratio of the company over the next three years is expected to be approximately 87%. Regardless, SABIC Agri-Nutrients' ROE is speculated to decline to 16% despite there being no anticipated change in its payout ratio.

Conclusion

Overall, we feel that SABIC Agri-Nutrients certainly does have some positive factors to consider. Namely, its significant earnings growth, to which its moderate rate of return likely contributed. While the company is paying out most of its earnings as dividends, it has been able to grow its earnings in spite of it, so that's probably a good sign. With that said, on studying the latest analyst forecasts, we found that while the company has seen growth in its past earnings, analysts expect its future earnings to shrink. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.