We Think Tourism Enterprise Company (Shams) (TADAWUL:4170) Can Easily Afford To Drive Business Growth
Just because a business does not make any money, does not mean that the stock will go down. For example, although software-as-a-service business Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?
Given this risk, we thought we'd take a look at whether Tourism Enterprise Company (Shams) (TADAWUL:4170) shareholders should be worried about its cash burn. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). First, we'll determine its cash runway by comparing its cash burn with its cash reserves.
How Long Is Tourism Enterprise Company (Shams)'s Cash Runway?
A company's cash runway is calculated by dividing its cash hoard by its cash burn. When Tourism Enterprise Company (Shams) last reported its June 2026 balance sheet in August 2026, it had zero debt and cash worth ر.س236m. In the last year, its cash burn was ر.س16m. So it had a very long cash runway of many years from June 2026. While this is only one measure of its cash burn situation, it certainly gives us the impression that holders have nothing to worry about. The image below shows how its cash balance has been changing over the last few years.
View our latest analysis for Tourism Enterprise Company (Shams)
Is Tourism Enterprise Company (Shams)'s Revenue Growing?
Given that Tourism Enterprise Company (Shams) actually had positive free cash flow last year, before burning cash this year, we'll focus on its operating revenue to get a measure of the business trajectory. Unfortunately, the last year has been a disappointment, with operating revenue dropping 20% during the period. Of course, we've only taken a quick look at the stock's growth metrics, here. You can take a look at how Tourism Enterprise Company (Shams) has developed its business over time by checking this visualization of its revenue and earnings history.
How Easily Can Tourism Enterprise Company (Shams) Raise Cash?
Since its revenue growth is moving in the wrong direction, Tourism Enterprise Company (Shams) shareholders may wish to think ahead to when the company may need to raise more cash. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.
Since it has a market capitalisation of ر.س592m, Tourism Enterprise Company (Shams)'s ر.س16m in cash burn equates to about 2.8% of its market value. That means it could easily issue a few shares to fund more growth, and might well be in a position to borrow cheaply.
So, Should We Worry About Tourism Enterprise Company (Shams)'s Cash Burn?
As you can probably tell by now, we're not too worried about Tourism Enterprise Company (Shams)'s cash burn. In particular, we think its cash runway stands out as evidence that the company is well on top of its spending. Although its falling revenue does give us reason for pause, the other metrics we discussed in this article form a positive picture overall. Looking at all the measures in this article, together, we're not worried about its rate of cash burn; the company seems well on top of its medium-term spending needs. Separately, we looked at different risks affecting the company and spotted 2 warning signs for Tourism Enterprise Company (Shams) (of which 1 is a bit concerning!) you should know about.
If you would prefer to check out another company with better fundamentals, then do not miss this free list of interesting companies, that have HIGH return on equity and low debt or this list of stocks which are all forecast to grow.
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