Goodday Nairalanders,

Pls, can someone help me out with this.

(1). The value of a company is its Market capitalization which is the number of shares multiplied by stock price.
If a company wants to list on the stock exchange, how is its listing stock price determined in order to arrive at the market cap?

(2) -Nigerian Breweries has a revenue of N307B and Market cap of N1.25T
-Nestle Nigeria has revenue of N151B and market cap of N760B
-Forte Oil has a revenue of N146B and market cap of N256B
-Dangote Cement has a revenue of N290B and market cap of N4T
.............(Note that some of the above figure might not be current)............

If you compare the market cap to revenue ratio of the above listed companies, NB is 4.07, Nestle is 5.03, Forte Oil is 1.7, Dangote Cement is 13.8.

(a) why are the differences in the market cap to revenue ratio?
(b) must market cap be higher than revenue?
(c)why the huge gap between the market cap to revenue ratio of Dangote Cement and other companies?

Someone should answer na

ultron12345:
Someone should answer na

Apart from the revenue can you also get the profit after tax of Nigeria Brewery, Nestle, Forte Oil and Dangote cement.

Also get the shareholders funds of the companies.

ultron12345:
Goodday Nairalanders,

Pls, can someone help me out with this.

(1). The value of a company is its Market capitalization which is the number of shares multiplied by stock price.
If a company wants to list on the stock exchange, how is its listing stock price determined in order to arrive at the market cap?

(2) -Nigerian Breweries has a revenue of N307B and Market cap of N1.25T
-Nestle Nigeria has revenue of N151B and market cap of N760B
-Forte Oil has a revenue of N146B and market cap of N256B
-Dangote Cement has a revenue of N290B and market cap of N4T
.............(Note that some of the above figure might not be current)............

If you compare the market cap to revenue ratio of the above listed companies, NB is 4.07, Nestle is 5.03, Forte Oil is 1.7, Dangote Cement is 13.8.

(a) why are the differences in the market cap to revenue ratio?
(b) must market cap be higher than revenue?
(c)why the huge gap between the market cap to revenue ratio of Dangote Cement and other companies?

The listing price is empirically determined. Valuation method used I suppose is the weighted average of different valuation methods; book value, discounted cash flow and comparable method. Whether the exchange attach equal weights to each I can't say. You may refer to Google or exchange website for more clarification

On the other questions, here are the answers;

1. The difference is due to difference in mkt cap and turnover. Even coys in the same industry don't have same cap and rev.

2. When mkt cap is higher than revenue, investors tag such stocks as overvalued. Conversely, a stock with low mkt cap to revenue is termed undervalued and candidate for growth

3. Dangote is among the top three most capitalized stock on the exchange. It is a blue chip company. The value is growing at an exponential rate than the revenue representing a defensive stock.

Hope this clarifies your requests.