Equity basics

Price-to-Earnings. How many naira investors pay for ₦1 of yearly profit. Lower can mean cheap or distressed; higher can mean expensive or growing. Compare to peers and to the stock's own 5-year median.

Annual dividend ÷ current share price. A 6% yield means the stock pays you 6% of its price in dividends per year. Note: in Nigeria, the company already deducts 10% WHT — what you receive is net of tax.

Share price × total shares outstanding. The whole company's price tag. Nigerian large caps are >₦500B; mid-caps are ₦50-500B.

Earnings per share. Net profit divided by shares outstanding. Grows when earnings grow OR when the company buys back shares.

Return on Equity — net profit ÷ shareholder equity. Tells you how efficient management is at turning your stake into profit. Nigerian banks typically run 15-25%.

What the company would be worth if it sold all assets and paid all debts today. Banks trading below book are interesting; manufacturers below book are usually broken.

Price-to-Book — share price divided by book value per share. Below 1× means the market values the company at less than its accounting net worth. Below 1× is common (and often justified) for Nigerian banks.

P/E divided by expected earnings growth rate. PEG below 1 suggests the stock is cheap relative to its growth; above 2 suggests expensive. Sanity-check the growth assumption — Nigerian forecasts often optimistic.

Cash left after a business pays operating expenses and capital spending. FCF pays dividends, buybacks, and reduces debt. Earnings can be massaged; FCF is harder to fake.

Operating profit ÷ revenue. Shows how much of every ₦100 of sales the company keeps after running the business (before interest and tax). Nigerian banks: 40-55%. Cement makers: 25-35%.

Net profit ÷ revenue. The final cut after every expense, interest, and tax. Stable net margin > 15% across cycles signals genuine pricing power.

(Revenue − cost of goods sold) ÷ revenue. The first profit cut, before SG&A and tax. High gross margin (>50%) signals brand power or scale; low (<20%) signals a commodity business.

Total debt ÷ shareholder equity. Above 1× means the company owes more than its owners' stake; below 0.5× is conservative. Nigerian manufacturers running >2× during 2024 FX crisis got crushed.

Current assets ÷ current liabilities. Above 1× means the company can pay this year's bills from this year's cash and inventory. Below 1× is a liquidity red flag.

Like the current ratio but excludes inventory (because inventory can be hard to sell quickly). Above 1× is healthy; below 0.5× signals the company may struggle to pay short-term debts.

Operating profit ÷ interest expense. Tells you how many times over the company can pay its interest bill from earnings. Below 2× is dangerous; above 5× is comfortable.

Dividends paid ÷ net profit. Tells you how much of profits the company returns vs reinvests. Sustained >100% means dividends are being funded from debt or reserves — eventually breaks.

EPS ÷ dividend per share. The reciprocal of the payout ratio. Above 2× means earnings cover the dividend twice — safe. Below 1.2× means a single bad quarter could force a cut.

Current annual dividend ÷ your original purchase price. If you bought at ₦20 and the company now pays ₦4/year, your yield on cost is 20% — locked in for as long as you hold.

The first trading day a buyer does NOT receive the next dividend. To collect it you must own the share before this date. Stock typically drops by ~the dividend amount on ex-date.

Cut-off date the company looks at its share register to decide who gets the dividend. Falls 1-2 days after the ex-date due to T+2/T+3 settlement.

Period when the NGX register is closed for share transfers ahead of a dividend or AGM. Common in Nigeria; trades during book closure settle after it reopens.

Company repurchases its own shares from the market, reducing the share count. Boosts EPS mechanically. Rare in Nigeria due to regulatory hurdles; common globally.

Cosmetic increase in share count with a proportional drop in price. A 2-for-1 split turns 100 shares at ₦50 into 200 shares at ₦25. Your value, ownership, and dividends per holding unchanged.

Existing shareholders are offered new shares at a discount, in proportion to their holding. Dilutes you if you don't subscribe. Common Nigerian banks use it to raise capital.

Free shares issued to existing shareholders out of retained earnings. Increases your share count without you paying anything; share price adjusts down proportionally.

The ~3-4 week window each quarter when listed companies publish financial results. NGX requires quarterly filings within 30 days of period end. Big mover days for stocks.

Management's forward-looking commentary on revenue, profit, or margins. Nigerian disclosures lean conservative-to-silent compared to US peers. Beats vs misses move the stock.

Shares actually available for public trading — total shares minus insider, government, and locked-up holdings. Small float = thin liquidity and choppy price action.

Percentage of shares held by management, founders, and directors. >15% is healthy alignment; >50% can signal weak public-shareholder voice. Tracked in annual reports.

NGX divides listings into Premium (top 3 by liquidity and governance), Main, ASeM, and Growth boards. Premium board has stricter disclosure rules and is where most blue-chips sit.

Time between trade execution and the cash/shares actually changing hands. NGX uses T+3 (three working days). US stocks use T+1.

How quickly you can sell without moving the price. NGX large caps trade ₦500M+/day = liquid. Penny stocks trading ₦5M/day = illiquid; expect to lose 5-10% to spread.