Aramco gas station
Source: Aramco Facebook

Saudi Aramco Is the World’s Most Profitable Publicly Traded Company

Mohit Oberoi, CFA - Author
By

Aug. 15 2022, Published 9:57 a.m. ET

Saudi Aramco released its earnings for the second quarter of 2022 and posted a net profit of $48.4 billion, which took its first half of 2022 net profits to $88 billion. Is Aramco publicly traded and can you invest in the company?

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Let's put Aramco’s profits into perspective. Apple, which has been America’s most profitable company, posted a net profit of $19.4 billion in the three months ended June 25, 2022. In the first nine months of fiscal 2022, Apple posted a net profit of $79 billion, a figure that Aramco surpassed in just six months.

How do Aramco’s profits compare to U.S. tech companies?

The earnings of the U.S. Big Tech companies, which are arguably among the most profitable companies in the world, pale compared to Aramco. For instance, Alphabet posted a net profit of $18.5 billion in the second quarter of 2022, while Microsoft posted a net profit of $16.7 billion in the June quarter.

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While the earnings of U.S. tech companies are upwards trending barring the odd quarter, Aramco’s earnings are volatile. The company reaped the benefits of higher crude oil prices in the first half of the year. However, crude oil prices have since fallen below $100 per barrel, which would hit Aramco’s earnings in the current quarter. While the company might still post higher YoY profits in the third quarter, it should taper down sequentially.

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Nonetheless, the record profits that Aramco has posted are the highest ever quarterly profits for any company. It might take any U.S. company years to reach that profitability level.

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Aramco is a publicly traded company.

Aramco is a Saudi state-owned oil company and was listed in 2019 after months of deliberations. Saudi Arabia continues to be the biggest stockholder in the company with around 94 percent stake. The initial valuation was considerably lower than what Saudi Arabia was originally looking at. However, as investors would recall, crude oil prices were subdued back then. In 2022, Aramco’s market cap surpassed Apple.

While Apple stock crashed amid the tech sell-off, Aramco stock soared amid the rise in energy prices. Apple has since pared its 2022 losses to around 3 percent and has reclaimed the title as the world’s largest company based on market cap.

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saudi aramco investing
Source: Aramco Facebook

Can U.S. investors buy Aramco stock?

Saudi Aramco stock trades on Tadawul, which is Saudi Arabia’s stock exchange. The company doesn't trade on any other exchange and the only way to invest directly in the company is through the stock on the Tadawul stock exchange.

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Saudi Aramco trades under the ticker symbol "2222.SR." While Saudi Arabia allows foreign investors to invest in the country, there are a lot of restrictions, and U.S. retail investors can't invest directly in the company.

If you somehow want exposure to Aramco stock, you can consider the iShares MSCI Saudi Arabia ETF (KSA). While Saudi Aramco is the largest company in Saudi Arabia by a fairly large margin, it's the fourth-biggest holding for the ETF and only accounts for 6.8 percent of the portfolio. The ETF has an annual expense ratio of 74 basis points.

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