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2222

Governance: A

SAUDI ARAMCO

Saudi Arabian Oil Co.

27.90 SAR / Share

As of: May 28, 2026

18.0x P/E Ratio Trailing 12 Months

4.4x P/B Ratio Price to Book Value

4.8% Dividend Yield Annual Dividend / Share

6748.51B SAR Market Cap Total Valuation

0.72 Beta Systematic Risk Index

23.6% Net Margin Net Profit / Revenue

The Story

Saudi Aramco is a state-backed energy giant characterized by massive cash generation, high returns on capital, and a strategic pivot toward downstream integration.

Source: Q1 2026 (2026-05-21)

Value Creation +24.7% Excess Return on Capital (Spread between ROIC/ROE and Cost of Capital)

Cash Flow Payback — Estimated years of operating cash flows required to cover Enterprise Value

Performance & Distributions

Dividend Yield Trailing annual dividends paid relative to share price

4.8%

Sustainable Growth Rate Rate at which company can grow internally using reinvested profits

+4.2%

Payout Ratio Percent of net profits distributed as dividends

86.0%

Net Margin Net profit margin generated from total operational revenue

23.6%

ROIC Return on Invested Capital

31.9%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

18.0x

P/B Ratio Market capitalization compared to corporate book value

4.4x

EV / EBITDA Operating multiple reflecting core operational leverage

8.3x

EV / SALES Asset pricing multiple relative to total topline revenue

4.3x

Growth Story

Saudi Aramco's revenue trajectory reflects its position as a mature commodity giant, with TTM revenue standing at SAR 1,586.8 billion, showing a slight recovery from FY 2025's SAR 1,559.3 billion but remaining below the FY 2023 peak of SAR 1,653.3 billion. To sustain its long-term growth capacity, the company maintains a 5-year average reinvestment rate of 13.21%. Combined with a stellar 5-year average ROIC of 31.92%, this yields a sustainable growth rate of 4.22%. Growth initiatives are increasingly focused on downstream expansion and portfolio optimization, as evidenced by the strategic divestments of SABIC Europe B.V. and the Engineering Thermoplastics business to focus on higher-growth markets, alongside ongoing capital expenditures which reached SAR 190.4 billion on a TTM basis.

Profitability Dynamics

Aramco's profitability is anchored by its exceptional ability to generate returns far exceeding its cost of capital. The company boasts a massive 5-year average ROIC of 31.92% against a WACC of 7.18%, creating a value-creation gap of 24.74%. This value generation is supported by robust operating margins, with the TTM operating margin at 46.30% (EBIT of SAR 734.6 billion) and a net profit margin of 23.61% (Net Income of SAR 374.7 billion). Profitability has remained resilient despite fluctuating revenues, supported by low extraction costs in its Upstream segment, which generated EBIT of SAR 203.2 billion in Q1 2026 alone. This immense profitability translates into substantial cash flows, enabling the company to declare a base dividend of SAR 82.1 billion in May 2026 and execute a share buyback program of up to SAR 11.25 billion.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

0.72

Cost of Equity Minimum required rate of return demanded by shareholders

7.4%

WACC Weighted average cost of total debt and equity funding

7.2%

Debt-to-Equity Ratio Proportion of corporate funding financed by debt creditors

5.6%

Risk Factors

Despite its massive scale, Aramco operates in a highly volatile geopolitical and macroeconomic environment. Recent Middle East instability and physical attacks on facilities in early 2026 highlight ongoing operational risks, though management has assessed the financial impact as immaterial. Financially, the company maintains a conservative risk profile with a relevered beta of 0.721, reflecting low systemic volatility. Total debt stands at SAR 379.5 billion, offset by a substantial cash reserve of SAR 230.8 billion. To optimize its capital structure, the company issued SAR 15.0 billion in USD-denominated senior unsecured notes in February 2026. Tax risks also exist, as its Downstream activities are subject to a conditional 20% tax rate (versus the standard 50% hydrocarbon rate), contingent on the legal separation of these activities by 2030.

Governance Disclosures

Rating: A

We track 10 key governance and oversight matters for this company in our database.

Significance: 4/10 Asset Risk

Financial Guarantees for Joint Venture Obligations

The company provided guarantees to external lenders for SAR 1,441 million, representing its subsidiary's share of the borrowing facilities for the Blue Hydrogen Industrial Gases Company joint venture.

Mitigating Factors: The guarantee is limited to the subsidiary's pro-rata share of the joint venture's debt.

Significance: 5/10 Propping

Shareholder Loan Waiver for Petro Rabigh

The company waived a shareholder loan receivable from its associate, Petro Rabigh, amounting to SAR 938 million in January 2025. This followed a previous waiver of SAR 1,875 million in August 2024. The waiver was recorded as an increase in the carrying amount of the investment.

Mitigating Factors: The waiver was performed proportionately with the other founding shareholder, Sumitomo Chemical.

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In-Depth Analysis