In this post, we look at the net profit margin of stocks that are in the banking industry group and listed on the Nigerian stock exchange. Before going into the post, itself, however, I would like to take a philosophical detour.
While preparing for this post, I had taken the “road to sophistication” and identified one financial ratio I thought would be very successful – the free cash flow yield. It turns out I was quite mistaken – sophistication does not always translate to success. I ran into so many problems, from consistent data identification to the comparability of results, that ultimately, I had a lot more questions than answers.
After an entire week of trying to solve the puzzle, I thought, why not try something from the basics? To that end, I will be making a shoutout to my buddy and sparring partner – Ahmed Olaitan Banu – who is as “crazy about the markets” as I am. We got talking and he reminded me of how he starts his analysis of Nigerian stocks. He compares the company’s gross profit to its total revenue! Simple right? Yes – and that simplicity inspired me to write about the net profit margin of Nigerian banks. Going back to the basics, truly. Thanks, Ahmed!