Theeb Rent a Car Company

Much the most leveraged balance sheet in the sector, and the widest reported margins in it: gross margin of 59.0% and EBITDA margin of 46.5%, both the highest of the three. It is also the only one of the three earning more from renting vehicles by the day than from leasing them by the year, which is where those margins come from.

Debt to equity is 2.19x against a sector median of 1.13x, and interest is covered 6.4x over, the thinnest cover here. That cuts both ways, and the second way is easy to miss: it also gives Theeb the cheapest capital in the sector at 8.6%, because debt is cheaper than equity and it has proportionally more of it. Against 9.6% of return that leaves a margin of +1.0pt, the widest of the three, on the narrowest cushion of the three.

Two things sit against it. Free cash flow of SAR -311M is the most negative in the sector, which in this industry means the fleet grew rather than that anything went wrong, but it is being funded on the balance sheet with the least room to fund it. And the payout of 53.4% of net profit is the highest of the three, declared in a year when the share count rose by more than half, so the dividend per share and the dividend bill are telling opposite stories.

Theeb is the counter business. Daily rental is 44% of its revenue against 19% at Budget Saudi, and it runs 66 rental points on only 11 maintenance centers and 2 showrooms: a network built to hand keys over rather than to service somebody else's corporate fleet.

It has financed that on much the most leveraged balance sheet in the sector, at 2.19 debt to equity with 63% of assets funded by borrowing. In 2025 it also raised the share count by more than half, from 43.0M shares to 66.0M, which is the other way a company in this position raises money.

It distributes more than half of net profit, the highest payout of the three, in a year when the fleet grew 21% and free cash flow was the most negative in the sector. That combination is only available to a company willing to fund it on the balance sheet, and this is the balance sheet in the sector least able to absorb a surprise while doing it.

The share issue is the part to sit with. Net profit was roughly flat year on year, at SAR 183M and then SAR 180M, while the share count went from 43.0M to 66.0M. Earnings per share fell by more than a third without the business earning any less.

Of what it earned in FY2025, Theeb declared SAR 1.46 a share, 53.4% of net profit, against free cash flow of SAR -311M. In this sector the free cash flow figure is not the test it looks like: a fleet business shows a negative one while it is buying vehicles faster than it retires them, which is growth rather than distress. Read it beside the fleet count, not on its own.