Jarir: Deep Dive

The short version

Most Saudi investors see Jarir as the safest retail stock on Tadawul. It has no bank debt, a famous brand, a 5.6% yield and founders who have run it for decades. The stock is up 32.6% this year and trades at SAR 16.94.

That picture hides one fact. Jarir pays out almost all the cash it makes, and has done so for ten years. From 2016 to 2025 it paid SAR 9,068m in dividends against SAR 9,274m of free cash flow after leases. That is 98%.

Since 2023 the dividend has also run above 100% of profit. The cash still covers it, 1.27x in 2025. But almost nothing is left over.

So the dividend has no cushion. Any growth in it must come from growth in profit. And the parts that make profit are under pressure:

• Sales are moving from stores to the app. Store sales, which include 11 Gulf stores, fell 5.8% in 2025. Total Saudi revenue still grew 4.6%, and store sales rose 5.0% in H1-26. Part of the 2025 fall may be how showroom orders are booked.

• Online earns less. E-commerce is now 32% of revenue. Its pre-tax margin is 6.3% against 9.4% in stores. So the mix is moving to the lower-margin channel.

• The 2026 margin rebound has a temporary cause. The company itself ties it to less discounting after a year of scarce supply.

• Apple now sells direct. Its Saudi online store opened in July 2025 with instalments and trade-in, the same tools Jarir uses.

• Governance is thin where it matters. A contractor linked to the chairman and the CEO was paid up to about half of 2025 capex. The finance director is acting. The internal audit head resigned in September 2025. And Jarir is now moving into consumer credit through RIFD.

Key numbers (5 Nov 2026 close, SAR 16.94, 1,200m shares)

• Market cap SAR 20.3bn. EV about SAR 20.9bn including leases.

• Trailing P/E 17.3x. Yield 5.6% on the last four quarterly dividends (SAR 0.95).

• 9M-26 revenue +9.7%, net income +16.7%.

• Model value per share: base SAR 12.12, upside 18.39, downside 6.12. Probability-weighted SAR 12.19, 28% below the price.

• The price implies 5.9% growth forever, against my 2.5%.

My view: overpriced, and held up by a yield with no margin of safety. The cash covers the dividend, but only just. In my base case the sustainable dividend is SAR 0.97 a share, against SAR 0.95 paid. In my downside case it must be cut, to a 2.7% yield at today's price.

My probability-weighted DCF value is SAR 12.19, about 28% below the price. Every cell in my sensitivity grid is below the price too. Only one market check sits above it: a 4.35% peer yield, which gives SAR 21.84. Two P/E checks come close, at SAR 16.47 and 15.77. I would get interested near SAR 12.