NGX Weekly Sector Watch: Consumer goods gain 3% YtD but now more expensive

Nigerian consumer goods stocks have seen a modest 3% year-to-date gain, but many are now trading at prices higher than they were at the end of 2025. The NGX sector index comprising 19 consumer goods companies has lagged behind other sectors, gaining only 1.34% in September compared to the 5.37% increase for the broader NGX All-Share Index.

Despite being below their 52-week highs, some of these stocks have become more expensive relative to their earnings, as investors pay a higher price for each N1 of earnings than they did at the end of last year. Among the 19 companies, BUA Foods accounts for over half of the combined market value, while Dangote Sugar has seen a 26% discount to its 52-week high, trading at more than N500 per N1 of earnings due to very small profits in the past year.

However, Dangote Sugar reported a N41.51 billion profit in the first half of 2026, marking an improvement from the loss of the previous year. Investors are cautious, as they want to see if this recovery can continue and if future dividends can support the current share prices. The earnings growth in the sector has been limited, with only a 44% rise in earnings per share for some companies, like Vitafoam, but this has led to higher prices that limit the cushion for any future earnings disappointment.

The average price paid for past-year earnings in the profitable stocks reviewed has risen from N52 to N62, with a few companies with very small profits skewing the average higher. While the sector has gained 3% year-to-date, not all stocks have followed this trend, as BUA Foods and International Breweries have experienced significant losses.

Despite trading below their 52-week highs, companies like Dangote Sugar and International Breweries have higher prices that may make them seem costly, even though they are still below their peak levels. Investors must assess whether the companies can generate sufficient earnings growth to justify the current prices.