Price alone means nothing

A share price is the price of one slice, and companies choose how many slices to cut. A business worth the same amount can have shares priced at ₦5 or ₦5,000 depending purely on how many exist.

The number that matters is price multiplied by the number of shares — the market capitalisation. That is what the market says the whole company is worth.

Comparing price to earnings

Divide the price of one share by the profit earned per share and you get the price-to-earnings ratio. Roughly, it says how many years of current profit you are paying up front.

A high ratio means the market expects growth. A low one can mean the business is cheap, or that people expect trouble. The ratio asks the question; it does not answer it.

Dividend yield

Annual dividend divided by the share price. A yield that looks unusually generous is often a warning: either the price has fallen hard, or the payout is not sustainable.

Volume and liquidity

Volume is how many shares changed hands. Low volume means you may struggle to sell without dropping your price, which is a risk that never shows up on a price chart.

Ignore the 52-week high

That a share is far below its highest price of the past year tells you nothing about whether it is worth buying. Businesses fall for reasons. Anchoring to an old price is one of the most common and expensive beginner habits.