Why Dar Al Majed Real Estate Company (TADAWUL:4326) Looks Like A Quality Company

While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. To keep the lesson grounded in practicality, we'll use ROE to better understand Dar Al Majed Real Estate Company (TADAWUL:4326). Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Put another way, it reveals the company's success at turning shareholder investments into profits. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. 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 Dar Al Majed Real Estate is:30% = ر.س340m ÷ ر.س1.1b (Based on the trailing twelve months to September 2025). The 'return' is the amount earned after tax over the last twelve months. That means that for every SAR1 worth of shareholders' equity, the company generated SAR0.30 in profit. See our latest analysis for Dar Al Majed Real Estate Does Dar Al Majed Real Estate Have A Good Return On Equity? By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. As you can see in the graphic below, Dar Al Majed Real Estate has a higher ROE than the average (13%) in the Real Estate industry. SASE:4326 Return on Equity January 29th 2026 That's what we like to see. However, bear in mind that a high ROE doesn’t necessarily indicate efficient profit generation. A higher proportion of debt in a company's capital structure may also result in a high ROE, where the high debt levels could be a huge risk . Our risks dashboardshould have the 2 risks we have identified for Dar Al Majed Real Estate. Why You Should Consider Debt When Looking At ROE Companies usually need to invest money to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same. Dar Al Majed Real Estate's Debt And Its 30% ROE Dar Al Majed Real Estate clearly uses a high amount of debt to boost returns, as it has a debt to equity ratio of 1.23. There's no doubt its ROE is decent, but the very high debt the company carries is not too exciting to see. Debt does bring extra risk, so it's only really worthwhile when a company generates some decent returns from it. Conclusion Return on equity is one way we can compare its business quality of different companies. Companies that can achieve high returns on equity without too much debt are generally of good quality. If two companies have the same ROE, then I would generally prefer the one with less debt. Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. It is important to consider other factors, such as future profit growth -- and how much investment is required going forward. Check the past profit growth by Dar Al Majed Real Estate by looking at this visualization of past earnings, revenue and cash flow. But note: Dar Al Majed Real Estate may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.