Conoil Plc and Eterna Plc may play in the same downstream oil space, but their recent journeys are very different.
Conoil’s share price has plunged 45% year-to-date, despite trading at expensive multiples and struggling with razor-thin profit margins. Investors have little dividend comfort to rely on, since its last payout was for the 2023 financial year.
Eterna, on the other hand, has gained 28% this year, trading at far cheaper valuations and showing stronger cash flow discipline.
Still, its earnings momentum has slowed, with 2025 profit likely to fall short of forecasts.
Now let’s dig into the numbers to see which of the two stands out as the stronger investment.
Financial performance
Looking at the numbers, Conoil continues to post profits, supported by its strong base in white products, which account for the bulk of revenue.
- Over the past five years, the company has grown its profit at a compound annual growth rate (CAGR) of 44%, an impressive figure.
- That said, this growth has not always translated into strong free cash flow. In fact, Conoil has averaged a negative free cash flow of N2.2 billion over the same period.
- In H1 2025, Conoil reported revenue of N144 billion, generating an operating profit of N5.91 billion; an operating margin of 4%.
- However, after finance costs and other deductions, the bottom-line profit was just N900 million, representing a razor-thin 0.93% net margin.
This is only about 10% of its full-year 2024 profit, raising concerns that earnings momentum may not be sustained through 2025.
Eterna, on the other hand, tells a weaker story.
- Over the past five years, its compounded profit growth has been much slower at 7.5% CAGR, though it does have one strength: consistent positive free cash flow, averaging N4.8 billion annually. This shows that while profits have been thin, cash generation has been healthier than Conoil’s.
- For H1 2025, Eterna posted just N424 million in profit, only 17% of its FY 2024 profit.
- This performance makes it unlikely that the company will meet its ambitious N1.247 billion profit forecast for 2025.
- Based on H1 2025 performance and second-half projections, full-year profit is more realistically expected to come in around N845 million.
- This potential earnings miss could weigh heavily on investor sentiment, especially given that the company’s cost of sales consumed more than 96% of revenue, leaving very little room for margin expansion.
Valuation check
On valuation, Eterna looks cheaper, no doubt with a P/E of 6.7x compared to Conoil’s 75x.
But cheaper doesn’t automatically mean better.
- Eterna is better on pure multiples; it trades at a discount and looks undervalued at first glance.
- Conoil is better on justified valuation despite the high multiples; its consistent profit growth might be the reason why investors are willing to pay a premium.
So, if you judge strictly by numbers, Eterna is better valued. But if you consider value backed by performance, Conoil takes the edge.
Verdict
Neither Conoil nor Eterna is doing particularly well. Their margins are razor-thin, and profits are weighed down by the high cost of sales.
- However, Conoil shows a stronger profit growth history but faces sustainability issues in 2025.
- Eterna looks cheap on valuation, but the reality is its growth is stalling, profitability is weak, and it may even miss its 2025 profit forecast.
- So, in truth, both companies are struggling; it’s just that Conoil has managed to “look better” than Eterna by growing earnings.
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