The stock market is like any other market except instead of goods on shelves, what are traded are shares of companies.
Imagine walking into a shop. One bottle of water is selling for N500, while another brand offers the same bottle for N200. You would probably pause and ask why is one so expensive?
Stocks work the same way. Valuation ratios, such as Price-to-Earnings (P/E) and others, help investors determine whether a stock is overpriced, fairly priced, or a bargain
A review of stocks listed on the NGX shows that some companies across sectors are trading at very high valuations.
Their Price-to-Earnings (P/E), Price-to-Sales (P/S), and Price-to-Book (P/B) ratios suggest these stocks are expensive, yet investors keep buying.
Why is that? To understand, let us first break down what these valuation metrics really mean
Think of P/E as how much you pay for every N1 a company earns. Geregu Power trades at about 103x P/E. That means investors are paying N103 today for every N1 Geregu has made over the last 12 months. That is considered expensive
But some are still buying, betting that Geregu’s earnings will grow sharply in the future.
Now, instead of profit, look at sales. BUA Foods trades at about 6x P/S. For every N1 of sales, the market values BUA Foods at N6. That’s high compared to other consumer goods firms, but investors believe its strong market position justifies the premium.
This compares market value to net assets. Conoil trades at about 4x P/B. In simple terms, if Conoil’s assets are worth N1 on paper, investors are willing to pay N4 for them in the market. Why? Because they expect Conoil to keep delivering strong returns.
In the industrial/building sector, BUA Cement is one of the most expensive stocks, trading at a P/E of 26x, P/B of 10x, and P/S of 5x.
While net income had declined at a 9% CAGR to N74 billion, H1 2025 saw a strong turnaround with profit jumping to N181 billion.
Take: The sharp H1 2025 recovery supports the premium valuation, making it attractive for growth-focused investors, though the historical decline in profits suggests caution for those wary of volatility.
Champion Breweries, International Breweries, and BUA Foods are among the consumer goods sector stock with the highest earnings multiple depicting premium valuation
Champion Breweries certainly impressed. Its share price is up over 345% YtD, probably due to its strong financial turnaround. Q2 2025 pre-tax profit soared to N1.7 billion, up 269% YoY, lifting H1 pre-tax profit to N3.4 billion, a sharp recovery from the N333 million loss in H1 2024.
Also, with a P/B of 10x and P/S of 6x, the stock is clearly priced at a premium, reflecting high expectations; any slip in growth could trigger a sharp correction.
Also, with a P/B of 10x and P/S of 6x, the stock is clearly priced at a premium, reflecting high expectations; any slip in growth could trigger a sharp correction.
International Breweries, despite a high P/E of 38, trades at a lower P/B and P/S of 4x and 3x, signaling a more moderate premium than some peers.
The company staged a strong profit comeback in Q2 2025, posting N26.4 billion pre-tax profit, reversing last year’s N61.8 billion loss, and lifting H1 pre-tax profit to N61.5 billion from a N150.2 billion loss in H1 2024. Its stock has also gained 123% YtD, making it one of the sector’s top performers.
For investors comfortable with growth and some risk, International Breweries is a compelling buy, supported by its recovery and solid H1 numbers, though the high P/E and past volatility warrant caution.
BUA Foods’ premium valuation: P/B 15x, P/S 6x, P/E 26.18 reflects high market expectations, meaning any slowdown in growth could weigh on returns.
Investors are paying a premium based on strong growth expectations, and any slowdown in earnings or market challenges could cause the stock to underperform.
The stock is a buy only for those confident in continued momentum and willing to accept the risk of a correction.
From the oil and gas sector, Conoil and Total Energies are the most expensive; trading well above sector average earnings multiples and their book values, signaling premium valuations relative to their peers.
Conoil carries a P/E of 84x, while Total sits at 53x, both far higher than the sector average of 27x.
Their P/S ratios 0.57x for Conoil and 0.23x for Total remain below the sector average of 1.23x, indicating that while investors are pricing in strong earnings growth, the market is cautious on revenue multiples.
Over the past five years, Total Energies has grown earnings at a 68% CAGR to N27.5 billion by 2024 but posted a N2.8 billion loss in H1 2025, while Conoil’s 43% CAGR growth continues with N900 million in H1 profit.
In the real estate and construction sector, UPDC is the priciest stock, trading at a P/E of 46.43x and a P/B of 13x.
Its strong earnings rebound from N160 million in 2022 to N432 million in 2024, and an impressive N1.8 billion in H1 2025 partly justifies this premium, reflecting investor confidence in continued growth.
However, the high multiples assume sustained momentum; any slowdown in earnings or market headwinds could cap upside potential.
In the hospitality and tourism sector, Transcorp Hotel is one of the priciest stocks, trading at a P/E of 99x, P/B of 20x, and P/S of 19x, extremely high multiples by any measure.
The company has staged an impressive turnaround, moving from a N6 billion loss to a N14.9 billion profit in 2024, with H1 2025 profit already at N8.7 billion, demonstrating strong operational momentum.
While the recent earnings recovery supports part of this valuation, the multiples are extremely high, meaning any slowdown in performance could quickly make the stock appear overvalued.
Geregu Power’s valuation premium is steep by all conventional metrics; at P/E of 103, it is one of the highest on the NGX added to high price to book ratio and price to sales.
But its strong half-year results show why investors are willing to pay up. The company has already outpaced much of last year’s performance in just six months, fueling expectations of sustained growth.
For shareholders, the big question is whether Geregu can keep delivering numbers that justify such lofty multiples. If it can, the premium will look deserved. If not, the stock risks a sharp correction.
Overall, high P/E stocks on the NGX signal lofty expectations. Recent earnings growth supports some of these premiums, but investors must weigh historical performance, growth sustainability, and risk tolerance before adding them to their portfolios.
Growth-focused, risk-tolerant investors may find opportunities across sectors, but caution is warranted given the elevated valuations.