5 Numbers That Tell You Whether a Nigerian Stock Is Worth Buying (With Real Examples)

Infographic showing five key financial metrics used to evaluate Nigerian stocks, featuring real examples from Zenith Bank, GTCO, Dangote Cement, and MTN Nigeria to help investors make informed decisions on the NGX.

Your friend just called you. He says a stock is "about to blow."

He doesn't know why. He heard it from someone who heard it from someone else. He sounds very confident. He always sounds very confident.

You have been here before.

Maybe you bought the stock. Maybe it went sideways for six months and you kept refreshing your portfolio app like that was going to help. Maybe it dropped 30% and your friend suddenly became very busy and stopped picking up. Maybe you made money once on pure luck and now you are trying to figure out how to make it happen again, on purpose, with your eyes open.

That is what this is for.

There are five numbers that professional analysts look at before they put a single kobo into any stock. These numbers cut through the noise. They work whether the market is booming or bleeding. They work for big blue-chip names and for mid-size companies most people have never heard of. And once you understand them, no WhatsApp group tip will ever be able to rush you again.

Here are the five numbers, with real Nigerian companies and real data.

But First: Why This Matters Right Now

The Nigerian stock market is having a moment.

The All-Share Index crossed 200,000 points for the first time ever in Q1 2026, returning 29.35% to investors in just three months. Year-to-date through May 2026, the ASI is up over 57%.

Three things are driving this. TRW Stockbrokers summarised it well: FTSE Russell reclassified Nigeria back to Frontier Market status, which unlocks somewhere between $840 million and $1 billion in global passive fund inflows. Corporate earnings from FY2025 came in very strong, led by Dangote Cement, Seplat Energy, and Zenith Bank. And the CBN has kept things relatively stable, with the naira appreciating to N1,354 per dollar and FX reserves sitting at a 13-year high of $50.45 billion.

International money is returning. Smart domestic money is already in. And everyone else is looking at a market that has already moved a lot and wondering whether it is too late to join.

It is not too late. But you need to know what you are buying and why. That starts with five numbers.

Number 1: The P/E Ratio

What it is: Are you paying a fair price for this stock?

Full name: Price-to-Earnings Ratio.

The formula is simple. Take the share price. Divide it by how much profit the company makes per share. That result is the P/E ratio.

What it tells you is how much you are paying for every naira of annual profit the company generates. A P/E of 10 means you are paying N10 for every N1 the company earns per year.

Think of it like this. Imagine two suya spots. Same quality suya. Same cuts of meat. Same smoky taste. One is charging N1,500 per stick. The other charges N500. Before you pay the higher price, you want to understand what you are getting for the difference. The P/E ratio does exactly that comparison, except it is applied to company profits instead of suya sticks.

What the numbers mean in plain language:

A P/E below 10 suggests the stock may be undervalued. Between 10 and 15 is roughly fair. Between 15 and 25 is starting to get expensive. Above 25, the company needs to be growing very fast to justify that price.

Real Nigerian example:

As of mid-2025, Dangote Cement was trading at a P/E ratio of 12.22x. The industry average P/E was 41.81x. That means investors were paying roughly three times more for a typical company in that sector than they were for Dangote Cement. Analysts flagged that as a likely undervaluation signal, which is a polite way of saying the stock looked cheap relative to what it was actually producing.

There is a wider point worth sitting with here. A recent analysis by market analyst Oluwasogo Oguntade showed that Zenith Bank was trading at below ten US cents per share despite generating returns and dividend yields comparable to major American banks like JPMorgan, which trades above $300. Nigerian stocks are still priced cheaply relative to what the underlying businesses actually produce. That gap will not last forever.

One thing to watch: A low P/E is not always good news. Sometimes a stock is cheap because something is genuinely wrong with the business. That is why you never stop at one number. You always keep reading.

Number 2: ROE

What it is: Is this a well-run business?

Full name: Return on Equity.

Equity, in simple terms, is the money that belongs to the shareholders of a company. What is left over after you subtract what the company owes from what it owns. ROE tells you how efficiently the business is turning that shareholder money into profit.

The formula: take the annual profit, divide it by shareholders' equity, multiply by 100. The result is a percentage.

If the ROE is 20%, that means for every N100 investors have put into the business, the company is generating N20 in profit every year. Think of it like a savings product. If you deposited N100,000 and it returned N20,000 a year, you would be very happy with that product. ROE applies the exact same logic to a company.

What the numbers mean in plain language:

Below 10% is weak. Between 10 and 15% is average. Between 15 and 20% is good. Above 20% is excellent, the kind of number that makes serious investors pay attention.

Real Nigerian example:

In its FY2025 full-year results, Guaranty Trust Holding Company reported a Return on Equity of 28.28%. That is not just a good Nigerian number. That is a globally competitive number. For every N100 of shareholder money sitting inside GTCO, the business generated N28.28 in profit in 2025. Their cost-to-income ratio was 27.86%, which means they kept their running costs very lean relative to what they earned.

GTCO also became the first West African financial institution to dual-list on the London Stock Exchange, raising N504 billion in fresh capital in the process. International institutional investors are not sentimental. They do not show up for businesses they do not trust.

Zenith Bank's ROE as of December 2025 was 22.88%, which is close to its 10-year median of 23.08%. A decade of staying above 20% is not a coincidence. It is what genuinely excellent management looks like over time.

Number 3: Dividend Yield

What it is: Is this stock paying you while you hold it?

Full name: Dividend Yield.

This is the number income investors care about most, and it is probably the easiest one to fall in love with once you understand it.

The formula: take the annual dividend the company pays per share, divide by the current share price, multiply by 100.

If you invest N1 million in a stock with a 7% dividend yield, you collect roughly N70,000 per year in cash, paid directly to you, regardless of whether the share price goes up or down that day. Think of it like rent from a property, except there is no tenant, no leaking roof, no agent calling you on a Saturday morning, and no Omo-Onile situation.

What the numbers mean in plain language:

Below 3% is low income. Between 3 and 7% is moderate. Above 7% is attractive, the kind of yield worth serious attention.

You also want to look at the Dividend Payout Ratio alongside this. That number tells you what percentage of earnings the company is paying out as dividends. A payout ratio of 40% means the company distributes 40% of its profit to shareholders and keeps 60% to reinvest in the business. A payout ratio above 90% can be a warning sign that the dividend may not be sustainable the following year.

Real Nigerian example:

Zenith Bank's dividend yield sits at approximately 7.84%, with a payout ratio of just 20.9%. That combination is genuinely unusual. A high yield and a low payout ratio means the bank is paying you very well and still holding on to most of its earnings to grow the business further. For FY2025, Zenith proposed a total dividend of N10.00 per share, compared to N4.00 the year before. That is a 150% increase in dividend in a single year.

Dangote Cement paid N30 per share for FY2025, representing a yield of 6.81% at the time of announcement. The company has paid above N10 per share every year since 2018, with the amount growing over time. It won Dividend Paying Company of the Year at the 2025 Nairametrics Capital Market Choice Awards for a reason.

Number 4: Debt-to-Equity Ratio

What it is: Can this company survive a bad year?

This number tells you how much of the company is running on borrowed money versus money that actually belongs to shareholders.

The formula: total debt divided by shareholders' equity.

A debt-to-equity ratio of 0.4 means for every N1 owned by shareholders, the company owes 40 kobo in debt. That is manageable. A ratio of 3.0 means the company owes three times more than it owns, which starts to look like someone funding their lifestyle entirely on credit cards.

High debt is not automatically a dealbreaker. Companies borrow to grow, and that can be smart. But in a country where interest rates have been elevated and the naira has been through real turbulence, a heavily indebted company is vulnerable in ways that a low-debt company is not. If interest payments eat too much of the profit, there is nothing left for dividends or reinvestment. If the naira falls sharply and the company has dollar-denominated debt, the balance sheet can deteriorate very fast.

What the numbers mean in plain language:

Below 0.5 is a strong balance sheet. Between 0.5 and 1.0 is acceptable. Above 2.0 is high financial risk, and you need to understand exactly why before you go anywhere near it.

Real Nigerian example:

The MTN Nigeria story from 2024 into 2025 is the best possible classroom for this number.

In 2024, MTN Nigeria reported a net loss of N399.4 billion. The core business was growing. Revenue was rising. Subscribers were adding up. But the balance sheet was being crushed by FX revaluation losses on dollar-denominated debt as the naira fell. The company technically had negative shareholders' equity.

Then, they fixed it.

By FY2025, MTN Nigeria's results told a completely different story. Profit after tax came in at N1.11 trillion. Revenue grew to N5.20 trillion from N3.36 trillion. Earnings per share swung from a loss of N19.05 to a profit of N53.07. The company returned to positive shareholders' equity and proposed a full-year dividend of N20.00 per share. The 50% telecom tariff adjustment approved in January 2025 reset the revenue base, smartphone penetration reached 65.1%, and service revenue grew 54.9% year on year.

The lesson here is not that MTN Nigeria was a bad business in 2024. The lesson is that the debt-to-equity ratio, alongside the rest of the balance sheet, would have told you exactly where the risk was sitting and exactly when the recovery started. You do not need to guess. The numbers tell you.

Number 5: Earnings Growth

What it is: Is this business getting stronger every year or slowly dying?

Formula: take this year's earnings, subtract last year's earnings, divide by last year's earnings, multiply by 100.

This is the number that separates stocks you buy for a quick trade from stocks you hold for ten years and retire on.

A company that grows its earnings consistently will almost always deliver superior long-term returns. Share prices follow earnings over time. Everything else, sentiment, rumours, market cycles, the cousin with the hot tip, all of it is just noise around that underlying truth.

What to look for:

Single-year growth is a start. Three to five years of consistent growth is where it gets interesting. Double-digit earnings growth sustained over multiple years is the sign of a genuinely excellent business. And declining earnings over multiple years, even at a cheap P/E, is usually a trap. The stock looks affordable because the earnings keep shrinking, and a low P/E on a shrinking business is not a bargain. It is a warning.

Real Nigerian example:

GTCO's underlying earnings engine is growing faster than the headline numbers suggest. The 2025 profit dipped slightly from 2024 only because 2024 included N517.5 billion in one-off FX revaluation gains that did not repeat. Strip those out and the core business grew. Fee income was up 25.88%. Interest income was up 23.2%. Their digital payments subsidiary HabariPay saw total processing value grow 195.4%. Management has guided for a Profit Before Tax of N1.4 trillion in 2026, up from N1.23 trillion in 2025. That is 14% guided profit growth from a business already generating 28% ROE.

For MTN Nigeria, the earnings growth story is structural, not a one-year event. Nigeria has 307 million plus mobile subscribers across MTN's African network. Data consumption is rising. Fintech is expanding. The tariff reset has permanently moved the revenue base upward. This is a company positioned right in the middle of Nigeria's digital transition, and that transition is nowhere near finished.

Putting the Five Numbers Together

Here is what FY2025 data looks like for four of the most discussed NGX names, all in one place:

Metric	Zenith Bank	GTCO	Dangote Cement	MTN Nigeria
P/E Ratio	~6.2x*	~10x*	12.22x	~18x*
ROE	22.88%	28.28%	~18%*	Recovering
Dividend Yield	7.84%	~6.5%*	6.81%	~4 to 5%*
Dividend Per Share (FY2025)	N10.00	N12.76	N30.00	N20.00
Earnings Trend	Strong	Stable with growth	Strong recovery	Major turnaround

Figures marked with an asterisk are approximate, based on share prices at the time of reporting. Share prices move daily. Always check current prices before making any investment decision.

Now read the table like a story, not a spreadsheet.

Zenith Bank's P/E of roughly 6.2x looks like a bargain on its own. Add a 22.88% ROE, a 7.84% dividend yield, and a 150% jump in dividend per share, and the picture becomes something much more compelling than a single number could tell you. GTCO's ROE of 28.28% already stands on its own. Place it next to 14% guided profit growth and a brand new London Stock Exchange listing that signals real international confidence, and you are looking at a very different conversation.

No single number tells the whole story. All five together do.

The Shortcut for All of This

If running these calculations manually sounds like a lot of work, that is exactly why we built the EconomyActually Stock Appraisal Engine. It scores any NGX-listed stock out of 100 across all five pillars. You do not need a finance degree. You just need the company name and a few minutes.

EPS (Earnings Per Share)

What it is: How much profit is the company making for each share you own?

Formula: Profit after tax divided by the total number of shares in issue.

This number tells you exactly how much of the company's annual profit belongs to each share. If a company made N100 billion in profit and has 10 billion shares in issue, the EPS is N10. It is the most direct measure of whether a company is genuinely making money for its shareholders, not just generating revenue and losing it somewhere along the way.

Think of it like this. Two pepper soup joints both tell you business is booming. One is serving 500 customers a day. The other is serving 500 customers a day but spending so much on ingredients, rent, and staff that it barely keeps anything. EPS is the number that tells you which one is actually profitable per portion served.

What the numbers mean in plain language:

Below N1 is very weak. Between N1 and N5 is average. Between N5 and N15 is good. Above N15 is excellent, the kind of number that signals a genuinely profitable business generating real returns per share.

Example:

Zenith Bank reported an EPS of approximately N33 for FY2025. GTCO came in at around N22. Both numbers sit well above the N15 excellent threshold, which is consistent with the strong ROE both banks reported in the same period. MTN Nigeria's EPS swung from a loss of N19.05 in 2024 to a profit of N53.07 in 2025, one of the most dramatic single-year turnarounds on the NGX in recent memory. That swing alone tells you more about the recovery story than almost any other number.

Three Things to Do Before You Buy Anything

One. Open a proper brokerage account. You cannot trade on the NGX without one. If you are investing from abroad, we have a full guide on how to invest in Nigeria from outside the country that covers every practical step.

Two. Go to the source. Every listed company on the NGX files its audited results directly with the exchange at ngxgroup.com. The five numbers in this article all come from those filings. You do not need to take anyone's word for anything, including ours.

Three. Understand what you own before you own it. Zenith Bank and GTCO are both excellent banking stocks. They are not the same business. MTN Nigeria and Dangote Cement are both large NGX names. They carry completely different growth drivers and risk profiles. Knowing the difference is what separates investing from gambling with better clothes on.

The Bottom Line

Analysts at Comercio Partners have pointed to MTN Nigeria, Dangote Cement, Zenith Bank, and GTCO as the names foreign institutional investors will target as fresh Frontier Market inflows land on the NGX. That is not insider information. It is publicly available research. Anyone can read it.

What separates someone who acts on that research well from someone who just reads it and moves on is understanding why those names are attractive, not just that smart people said so.

It means knowing that Zenith Bank's 7.84% yield is backed by a 22.88% ROE and a 20.9% payout ratio, which means both the income and the reinvestment capacity are intact. It means knowing that MTN Nigeria's revenue growth is structural, not temporary. It means knowing that GTCO's 28.28% ROE is a decade-long pattern, not a lucky year.

The five numbers in this article give you that understanding. They are the same numbers the analysts are using. Now you have them too.

Your cousin is still going to call. But next time, you will know exactly what questions to ask.

Want to score a specific Nigerian stock? Use the EconomyActually Stock Appraisal Engine to run any NGX company through all five pillars instantly.

Also useful: Mutual Funds vs Real Estate in Nigeria: Which Investment Actually Wins?

Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice. Always conduct your own research and consult a licensed investment professional before making any investment decisions. Share prices and financial metrics change frequently. Verify current data before acting.

Data Sources: