United Capital Plc is proving to be one of the most intriguing stocks on the Nigerian Exchange (NGX) — a company delivering stellar earnings growth while its share price remains subdued. Over the past five years, the investment and financial services group has recorded a compound annual growth rate (CAGR) of 63% in profit, totaling ₦56.43 billion. In 2024 alone, the firm’s profit jumped by over 111%, and that momentum has carried into 2025, underscoring a strong and resilient business model despite a volatile macroeconomic environment.
For the first half of 2025, United Capital reported a 54% year-on-year increase in profit after tax to ₦11.9 billion, while earnings per share climbed 53.5%. Gross earnings rose 57% to ₦23.76 billion, driven mainly by fees and commission income, which contributed over 64% of total revenue in the second quarter. Operating profit stood at ₦6.5 billion, supported by disciplined cost management and growing revenue streams. Group CEO, Peter Ashade, noted that the company “ended the first half of the year on a strong and positive note,” emphasizing that performance remained solid despite economic headwinds.
Yet, the stock market seems less convinced. United Capital’s share price has fallen 8.33% year-to-date, dropping from ₦20.40 at the start of 2025 to around ₦18.70, ranking it 137th in performance on the NGX. The decline follows an 11% drop in 2024, even though the stock had previously rallied from just ₦0.80 in 2020 to over ₦20. Analysts say this disconnect between strong fundamentals and weak price movement suggests either market caution or a significant undervaluation. Many investors are now questioning whether the market is overlooking United Capital’s growth story.
From a valuation perspective, the numbers tell a compelling story. The stock trades at a price-to-earnings (P/E) ratio of 11.91x, with a market capitalization of ₦337 billion against ₦166.9 billion in net assets and ₦1.586 trillion in total assets. Its price-to-sales ratio stands at 1.40x, while the company’s five-year profit CAGR of 63% places its PEG ratio between 0.19 and 0.22, well below the benchmark of 1. This indicates that United Capital may be significantly undervalued relative to its earnings growth potential, suggesting upside potential if market sentiment improves.
However, not all figures inspire confidence. The company reported a negative operating cash flow of ₦119 billion in H1 2025 due to a working capital deficit, which may raise liquidity concerns despite strong profits. Managed funds rose from ₦847 billion to ₦923 billion, reflecting sustained investor trust, while shareholders were rewarded with an interim dividend of ₦0.30 per share — a 45% payout ratio. For now, United Capital’s story is one of contrasts: robust financial growth on paper but lukewarm stock performance. Whether investors will soon re-rate the stock to match its fundamentals remains one of the key questions on the NGX.
source: nairametrics