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United Mining Industries Company's (TADAWUL:9583) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue?

Simply Wall St · 01/05 03:02

Most readers would already be aware that United Mining Industries' (TADAWUL:9583) stock increased significantly by 18% over the past week. But the company's key financial indicators appear to be differing across the board and that makes us question whether or not the company's current share price momentum can be maintained. Specifically, we decided to study United Mining Industries' ROE in this article.

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 To Calculate Return On Equity?

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 United Mining Industries is:

13% = ر.س25m ÷ ر.س190m (Based on the trailing twelve months to June 2025).

The 'return' is the income the business earned over the last year. Another way to think of that is that for every SAR1 worth of equity, the company was able to earn SAR0.13 in profit.

View our latest analysis for United Mining Industries

Why Is ROE Important For 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.

United Mining Industries' Earnings Growth And 13% ROE

As you can see, United Mining Industries' ROE looks pretty weak. Still, the company's ROE is higher than the average industry ROE of 8.7% so that's certainly interesting. Or may be not, given United Mining Industries' five year net income decline of 2.1% in 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 decline in earnings could also be the result of this.

Furthermore, even when compared to the industry, which has been shrinking its earnings at a rate of 1.2% over the last few years, we found that United Mining Industries' performance is pretty disappointing, as it suggests that the company has been shrunk its earnings at a rate faster than the industry.

past-earnings-growth
SASE:9583 Past Earnings Growth January 5th 2026

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). Doing so will help them establish if the stock's future looks promising or ominous. If you're wondering about United Mining Industries''s valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is United Mining Industries Efficiently Re-investing Its Profits?

United Mining Industries has a high three-year median payout ratio of 63% (that is, it is retaining 37% of its profits). This suggests that the company is paying most of its profits as dividends to its shareholders. This goes some way in explaining why its earnings have been shrinking. The business is only left with a small pool of capital to reinvest - A vicious cycle that doesn't benefit the company in the long-run. To know the 3 risks we have identified for United Mining Industries visit our risks dashboard for free.

Additionally, United Mining Industries started paying a dividend only recently. So it looks like the management may have perceived that shareholders favor dividends even though earnings have been in decline.

Summary

On the whole, we feel that the performance shown by United Mining Industries can be open to many interpretations. Primarily, we are disappointed to see a lack of growth in earnings even in spite of a moderate ROE. Bear in mind, the company reinvests a small portion of its profits, which explains the lack of growth. Up till now, we've only made a short study of the company's growth data. You can do your own research on United Mining Industries and see how it has performed in the past by looking at this FREE detailed graph of past earnings, revenue and cash flows.