Vitafoam may be on watchlists after an eye-catching rally in 2025, buoyed by strong revenue and profit growth.
Vitafoam set a new 52-week high of N94.60 on December 24, 2025, capping off a stellar year for the stock.
Having started 2025 at N23.00, the share price is now up 311%, ranking Vitafoam as the 10th best-performing stock on the NGX year-to-date.
Over the past four weeks alone, the stock has gained 13%, placing it 28th in short-term performance.
That kind of momentum, paired with a sharp earnings rebound and a tripled dividend, is most likely to keep investors having the stock and on analysts’ watchlists.
Vitafoam’s growth story in 2025 was powered not just by top-line expansion, but by what it didn’t lose – foreign exchange.
The foam segment continued to dominate revenue, contributing over 98% of group sales, which rose by 35% to N111.4 billion, reflecting steady demand and price increases.
Gross profit grew in line with revenue, up 35% to N41 billion, as gross margins remained relatively stable at 36.77%, up slightly from 36.50%.
While this shows Vitafoam was able to preserve pricing power despite inflationary pressures, it was not enough on its own to explain the company’s earnings jump.
The real story unfolds at the operating line. With foreign exchange losses dropping sharply to just N619 million from N12.7 billion in 2024, the company’s cost base was significantly lighter.
As a result, a much larger portion of gross profit flowed through to the operating line. Operating profit soared to N27.28 billion, up 258%, and operating margin more than doubled to 24.5% from 9.4%.
This strong operating performance lifted profit before tax to N27.28 billion, from just N7.62 billion a year earlier.
The FX relief not only shielded earnings from volatility but also amplified Vitafoam’s profitability without the company having to drive significant cost restructuring or margin expansion in its core business.
It was, in effect, a clean and direct boost to the bottom line, which also allowed the company to increase dividends and improve cash flows.
Backed by this improvement, the board proposed a N3.00 dividend per share, up from N1.05 last year.
But as ever, not everything is clean. The results also revealed a buildup in inventory, which rose by 40% to N28.73 billion, now making up 44% of total assets.
This contributed to a working capital cycle that lengthened to 118 days (from 86), suggesting slower inventory turnover or a strategic stock-up.
While the current ratio improved to 2.23x, showing liquidity strength, the cash conversion efficiency will need close monitoring going forward.
It suggests that while the company was profitable on paper, a significant portion of that value is tied up in unsold goods, which, if not quickly converted into sales, could pressure liquidity in the near term.
At a current price of N94.60, Vitafoam trades at 9x its FY2025 earnings (EPS: N10.80), a seemingly fair multiple after a 311% rally with earnings per share growth of 3,624% in 2025 FY.
But what happens if earnings grow at its more sustainable 5-year CAGR of 33%?
If the company can deliver steady, organic earnings growth not driven by FX swings, the current price still undervalues its future potential.
By 2026, EPS could climb to around N14.36, based on a realistic 33% CAGR. That suggests room for further upside.
But to justify and sustain that outlook, Vitafoam must tightly manage inventory, improve working capital efficiency, and continue navigating macro risks with discipline.
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