How to Research a Nigerian Company Before Buying Its Shares

Before buying shares in any Nigerian company, it’s important to ask yourself: Do I know what I’m investing in?

Blindly buying stocks because they’re cheap or trending is a risky strategy. Smart investors take time to research a company’s fundamentals, business model, and long-term outlook before putting their money on the line.

This post walks you through a beginner-friendly process of analyzing Nigerian companies before investing—so you can make confident, data-driven decisions, not emotional ones.

1. Understand the Company’s Business Model

Start with the basics. What does the company do? How does it make money? Is it in a growing or declining industry?

For example, Dangote Sugar operates in the FMCG space, which has high demand in Nigeria. On the other hand, a lesser-known company in an outdated industry may offer little growth potential—even if their shares look cheap.

Read about the company on its official website or news platforms like BusinessDay or Nairametrics.

2. Check Financial Performance

This is where you assess if the company is healthy or not. Look at the following indicators in its annual report or financial statements:

Revenue: Is income growing year-over-year?
Profit after tax: Is the company consistently profitable?
Debt levels: Too much debt increases risk.
Return on Equity (ROE): Shows how well the company uses shareholders’ funds.

You can find these reports on the Nigerian Exchange (NGX) portal or directly from company websites. A growing company with solid profits is usually a better investment.

3. Dividend History

If you’re interested in passive income, check the company’s dividend payout history. Do they pay dividends regularly? Is the amount increasing?

For instance, Zenith Bank has consistently paid good dividends for over a decade, making it a favorite among dividend investors.

If you’d like to learn how to build a dividend-earning portfolio in Nigeria, consider joining the Stocks and Shares Investment Masterclass (SASIM).

4. Share Price History and Volatility

How has the stock price moved in the last 6–12 months? A quick chart analysis can help you identify trends. Is the price stable or overly volatile?

Volatile stocks can offer high returns, but they also carry more risk. If you prefer stability, go for blue-chip stocks with steady price movements and a proven track record.

You can use broker apps like Afrinvestor or Meritrade to track stock performance over time.

5. Industry Position

Is the company a leader or a follower in its sector? Market leaders often enjoy better brand trust, pricing power, and stability during economic uncertainty.

For example, MTN Nigeria is a leader in the telecoms sector. Even if competition increases, they are likely to retain a large chunk of the market.

6. Management Quality

Behind every great company is a competent leadership team. Look up the CEO, board members, and executive team. Have they managed other successful firms before? Do they have a clear growth strategy?

Unstable leadership or frequent management changes could be red flags—especially in Nigeria, where governance is often overlooked.

7. Future Outlook and News Trends

Are there any recent developments—like mergers, new products, expansion plans, or court cases—that could affect the company’s future?

Use Google News or platforms like Proshare to track updates and gauge how the market is reacting.

8. Compare with Competitors

Don’t just analyze one company in isolation. Compare it with others in the same industry. For example, if you’re looking at Fidelity Bank, compare it with UBA, GTCO, or Access Holdings.

Compare their share price, dividend yields, financial ratios, and growth rates to choose the best performer.

Make Research Your Investment Habit

Stock research doesn’t have to be complicated. You don’t need to be an accountant. Once you learn what metrics matter—and how to interpret them—you’ll reduce your risk significantly.

If you want a simple framework to research Nigerian companies and select top-performing shares consistently, the SASIM Masterclass breaks down these steps in a beginner-friendly format.

Final Thoughts

Every naira you invest should be backed by informed decisions—not hearsay or hype. By researching companies before buying their shares, you increase your chances of making profitable and sustainable investments.

The Nigerian stock market is full of opportunities. But only those who take the time to study and strategize enjoy the long-term benefits.

Ready to invest smarter and stop guessing? Get the step-by-step training here.

How to Stay Rich in Nigeria

How to Research a Nigerian Company Before Buying Its Shares