Forte Oil Nigeria Plc hit a new year low on Monday after its share price closed trading at N94.32. At N94.3 Forte Oil Share price is now officially below N100 for the first time since April 2014.
The drop in Forte’s share price has been remarkable after riding a wave of bulls for the last three to four years culminating in an all time high of N337 in February 2016.
The share price began its dramatic fall soon after it hit that peak subsequently crashing to under N200 in May, just 3 months later. It picked up again a few days later, rising above N200 but eventually gave up that support on June 27th when it crashed to N190. The share price continued its slippery slide and broke the N150 support on October 14th when it crashed to N145.
Forte Oil is now down 71% year to date and is looking set to be one of the worst performers this year on the exchange. In terms of fundamentals, Forte oil in its 9 Months earnings reported a 33% drop in profits pointing some investors to a possibility of lower dividends and a bleak outlook for its market valuation. Forte Oil had attracted lofty market valuations over the years, trading at earnings multiple of over 90x at some point.
Forte Oil Share price has typically attracted the bulls anytime we approach a Forbes announcement suggesting that it is directly correlated to the chairman, Femi Otedola’s quest to be a billionaire. Mr Otedola has since fallen out of the Forbes billionaire list.
Worst is yet to come?
Investors currently fear that the worst is yet to come, as its current share price of N94 still values it at a Price to Earnings Multiple of 27x despite a medium term outlook that shows no profitability growth. In contrasts its competitors, Total, Mobil, Oando are trading below 10x their earnings with better growth prospects. For example, if Forte was to trade at Total’s price earnings multiple then its share price would be about N25.