Lagos, Nigeria – Nigeria Aviation Handling Company (NAHCO) Plc shares have gained about 46 percent in February alone as of the close of trading on February 23, bringing the year-to-date gain to 62 percent and making it one of the best-performing stocks on the Nigerian Exchange.
Okay News reports that the rally follows a 135 percent return in 2024, raising questions about whether investors are pricing strong fundamentals or speculative momentum. The Nigerian Exchange issued an investor alert on Monday over significant price movements in some listed stocks, warning investors to base decisions on publicly available information and careful assessments of companies’ fundamentals, while cautioning against speculative trading driven by rumours or unverified information.
Based on financial criteria including consistent earnings, profit margins, strong cash flow, healthy balance sheet, and growth outlook, NAHCO appears to have strong fundamentals supporting the rally. Revenue has grown at an annual rate of 66 percent over the past five years, while profit and earnings per share grew even faster at 155 percent and 158 percent per year respectively. Profit rose from N302 million in 2020 to about N13 billion in 2024, increasing consistently over the period.
The company’s efficiency in converting revenue into profit has continued to improve, with net profit margin rising from about 4 percent in 2020 to 28 percent in 2025. Dividend payments have also increased at a compound annual growth rate of about 163 percent, from 12.5 kobo in 2020 to N5.94 in 2024. The balance sheet shows total assets of N53.9 billion supported by a strong equity base of N26.5 billion, with current assets of N29.9 billion exceeding current liabilities of N22.7 billion, and cash balances rising to N11.2 billion. Borrowings remain modest at about N5 billion and largely flat year-on-year.
Trading activity shows a daily average volume of about 5 million shares over the past three months, pointing to good liquidity, with about 130 million shares valued at N16.3 billion traded over the same period. NAHCO’s free float of 56.67 percent, representing about 1.1 billion shares, indicates that a large portion of shares are in public hands rather than locked up with insiders, making the stock harder to corner by a small group of traders.
However, the stock is no longer cheap, with earnings multiples showing it trading at a premium. Investors are paying about N18.9 for every N1 of earnings, above the industry average of about N13.5. On an enterprise value basis, the stock trades at about 12.2 times EBITDA, meaning investors are paying N12.2 for every N1 of operating earnings. The growth-adjusted picture looks more supportive, with a PEG ratio of 0.12 suggesting that if earnings continue expanding at the current pace, today’s valuation could still be justified.
The rally, particularly in February, appears supported by fundamentals and strong trading liquidity, but the stock is now priced for growth with high market expectations. What happens next depends on whether the company’s earnings growth continues at a pace that justifies the premium valuation. The recent stock rally in NAHCO demonstrates how strong fundamentals can drive price appreciation, but investors should distinguish between fundamentally-driven moves and speculative momentum when evaluating stock rally sustainability.
