It has been observed that UACN Plc and some other equities on the Nigerian Stock Exchange (NSE) are outrageously under-priced. The current market price of UACN Plc should be about N116.34 not N40.30 as it is now.

It should be noted that the most useful information in the Stock Market Table as regularly published are:- The opening price, the closing price, the Earnings Per Share (E.P.S) and the Price Earnings Ratio (P. E. Ratio). The P.E Ratio figure is very important in an investor’s decision to buy or to sell equities.

Proof:- UACN PIc is the only blue chip company in the conglomerate diversified industry. It is a highly capitalised company with a large paid-up share capital. At its Earning Per Share (E. P. S) is currently N7.03. It is one of the ten (10) most profitable companies that are quoted on the Nigerian Stock Exchange (NSE).

If UACN PIc is evaluated on a scale of the average Price Earnings (P. E.) Ratio of the Nigerian Capital Market as at today, UACN Plc, (because of under-pricing) will have a deficit P. E. Ratio of 15.00 minus 4.14 which is 10.86 point. This deficit is due to the erroneous judgment of dealing clerks (Broker).

This deficit reduces the capital appreciation score of UACN Plc by 10.86 points. In value terms, this deficit will be 10.86 multiplied by N7.03 (the E. P. S. of UACN Plc), which gives N76.34. The correct price of UACN Plc should then be N40.00 plus N76.34 which amounts to N116.34 per share.

By the same reasoning, Okomu Oil Palm Plc is outrageously under-priced. The current Market Price should be N1OO.09 instead of Nl4.00 as it is now. Guinness is under-priced as at October 2012. The current market price should be about N340.63 instead of N281.00. Beta Glass Co. PIc is outrageously under-priced. The current market price should be N45.25 instead of N10.03. Nigerian Breweries (NB) PIc is overpriced. The market price should be NI09.51 instead ofNI42.00 as at October 2012.

Proof: As shown in the beginning above, 15.00 were taken as the Average P.E. Ratio of the Nigerian Capital Market. As at October 2012, Nigerian Breweries had a P.E. Ratio of 22.22 which is a surplus of 7.22 points over and above the Nigerian Capital market Average P. E. Ratio of 15.00 point.

This surplus increases the capital appreciation. Score of Nigerian Breweries by 7.22 point. In value terms, this 7.22 points multiplied by N4.50 (the E. P. S. of NBL) which is N32.49. The current market price of Nigerian Breweries PIc should be Nl42 (the high price) less the excess price of N32.49; which is NI09.51.

Nestle Nigeria PIc is outrageously over-priced. The market price should be N418.44 instead of N625.00 as at October 2012. Ecobank Transnational Incorporation is outrageously over-priced. The market price should be N8.00 instead of N11.05 as at October 2012. Lafarge WAPCO PIc is outrageously over-priced. The market price should be N29.65 instead of N57.50 currently.

In conclusion, those companies that are under-priced should be attractive to prospective buyers of shares while those investors whose company shares are over-priced should be encouraged to sell their shares.

Nwange is a fellow of the Chartered Institute of Stockbrokers.