UEC was founded in 2002 and is headquartered in Al-Khobar, Saudi Arabia. It is a retailer specializing in consumer electronics and appliances. Operating across 27 cities with 140,000+ square meters of retail space, it distributes televisions, computers, mobile devices, cameras, gaming products, and home appliances. The company also provides consumer financing through its Tasheel subsidiary

UEC reported Q3 25 revenue of 5.7bn Saudi Riyal (about $1.5bn), up 10.8% y/y, driven by robust retail sales and sustained demand for consumer electronics and financial services. EBIT and profitability were impacted by non-operating factors, including the absence of last year's non-recurring gains, resulting in net income of SAR 335.4m, slightly down from SAR 356.8m in Q3 24. Basic EPS from continuing operations declined to SAR 4.4. Overall, strong top-line growth was offset by margin pressures and exceptional costs, while underlying segment performance remained resilient.

Consistent growth

UEC maintained steady performance over FY 21-24, achieving a revenue CAGR of 5.2%, reaching SAR 6.8bn in FY 24, driven by a strategic shift toward an integrated retail-and-finance model and stronger like-for-like sales. EBIT rose at a CAGR of 10.4% to SAR 609m, with margins expanding by 122bp to 9.0%.

Over FY 21-24, FCF climbed from SAR 99.7m to SAR 267m, supported by cash inflow from operations, rising from minus SAR 17.0m to +SAR 278m. Cash and cash equivalent rose from SAR 173m to SAR 476m. In addition, its gearing improved from 124.7% to 93.2%.

In comparison, Jarir Marketing Company, a local peer, posted a revenue CAGR of 6.0%, reaching SAR 10.8bn over FY 21-24. EBIT rose at a CAGR of 1.3% to SAR 1.1bn. However, its margin contracted from 9.7% to 11.1%.

Positive outlook

Over the past year, the company's stock delivered negative returns of 14.3%. In comparison, Jarir Marketing also delivered negative returns of 2.7%. The company paid an annual dividend of SAR 7 in FY 24, resulting in a dividend yield of 7.8%.

UEC is currently trading at P/E of 13.0x, based on the FY 25 estimated EPS of SAR 6.7, which is lower than its 3-year historical average of 14.8x and Jarir Marketing (15.2x). The company is currently trading at an EV/EBIT multiple of 11.5x, based on the FY 25 estimated EBIT of SAR 680.6m, which is lower than its 3-year historical average of 14.1x and Jarir Marketing (14.7x).

The stock is liked by nine analysts, with each having 'Buy' ratings for a target price of SAR 114.2, reflecting 30.3% upside potential over its current market price.

Analysts' views are supported by an estimated EBIT is expected to rise at a CAGR of 10.6% to SAR 823m over FY 24-27, with margins expanding by 90bp to 9.9% in FY 27. In addition, analysts estimate a net profit CAGR of 4.4% to SAR 608m. In comparison, for Jarir Marketing, analysts estimate an EBIT CAGR of 3.2% and a net profit CAGR of 2.8%.

Overall, UEC presents a compelling investment opportunity at attractive valuations. The company's dual-engine growth model, traditional retail combined with high-margin consumer financing via Tasheel, drives resilience. Strong FCF generation, improving leverage, and projected EBIT growth through FY 27 support the positive outlook. However, it faces rising credit risk from Tasheel’s fast loan growth, margin pressures, regulatory scrutiny, economic sensitivity, and market caution as it expands its retail-finance model.