Zombie stocks: The Nigerian Exchange companies rallying on hope, not profits

Some of the Nigerian Exchange's biggest gainers in 2026 share one trait: their share prices are rising much faster than the businesses behind them. Several have reported years of losses, little or no revenue, delayed accounts, or questions about debt and ownership, yet their shares have gained between 50% and more than 1,000%.

What makes a zombie stock

Nairametrics classifies these as zombie stocks: listed companies whose businesses appear dormant, distressed or financially weakened, but whose share prices rally. The label does not mean every company is insolvent or incapable of recovering. It describes a sharp disconnect between market price and current operating performance.

In a typical zombie rally, investors are buying expectations rather than earnings, often driven by restructuring rumours, acquisition speculation, new ownership or recapitalisation plans.

How the zombies were identified

A rising share price alone does not make a zombie stock. Strong companies can rally when earnings improve, or the market corrects an undervaluation. For this analysis, Nairametrics compared share-price performance with revenue, profitability, earnings per share, retained earnings, returns on equity and assets, debt obligations and valuation multiples. They also considered delayed accounts, going-concern warnings, prolonged suspensions, free-float deficiencies, and ownership disputes. The clearest candidates display several of these weaknesses while attracting unusually strong demand.

Nigeria has seen this before

In February 2018, Nairametrics published a feature on zombie stocks whose prices were rising despite weak or dying businesses. Unity Bank was trading at N0.56 and had more than N237 billion in negative retained earnings. Yet it had gained about 181%, making it the exchange's best performer at the time. Skye Bank, Japaul, UNIC Insurance, and Union Dicon Salt were also identified. Their rallies were driven largely by expectations of acquisitions, restructuring or new investors rather than proven earnings improvements. Eight years later, some remained distressed, while others improved and no longer fit the label.

Former zombies that recovered

ABC Transport was named in 2018, but its recent numbers suggest it has moved beyond the label. Revenue rose from N6.6 billion in 2021 to nearly N16 billion in 2025, an estimated five-year compound annual growth rate of 24.85%. It also returned to solid profitability in 2024 and 2025. Its roughly 90% rally in 2026 therefore appears supported by expanding revenue and improving profitability.

Japaul Gold and Ventures has also changed considerably. Revenue grew roughly tenfold to almost N4.5 billion in 2025, profit after tax was positive in 2024 and 2025, while total assets increased from N13.1 billion to N33.5 billion. Its 40.3% gain in 2026 is also more restrained than the rallies of the most speculative names. Both show why the label must be reviewed as new information emerges.

Fortis Global Insurance

Fortis has gained about 1,270% year-to-date, but its financial performance remains weak. It has a trailing EPS of negative N0.13 and recorded sustained losses from 2021 through the first quarter of 2026. The rally is complicated by a four-for-one share consolidation and the company's return to trading after a six-year suspension. A consolidation mechanically increases the price per share because ownership is divided among fewer shares; it does not increase economic value. Part of the reported gain may therefore reflect arithmetic rather than investor demand. Even so, Fortis remains loss-making and is working to settle a N5.74 billion obligation linked to an old bond.

DAAR Communications

DAAR Communications has gained about 273% in 2026, including a sharp July rally. The company reported losses every year from 2021 to 2025, accumulating an estimated deficit of N6.35 billion. However, it posted a profit of about N335 million in the first quarter of 2026. Its streaming business showed stronger growth, while traditional television and radio recorded limited movement. An unresolved shareholding dispute also remains under regulatory review. DAARCOM is therefore better described as a speculative recovery candidate than a confirmed turnaround. Its next results will indicate whether the early improvement is sustainable.

Morison Industries

Morison has gained about 101.94% in 2026 despite a trailing EPS of negative N0.03. It lost money in four of the past five years, returned to a small N12.3 million profit in 2025, then slipped back into a loss in the first quarter of 2026. Despite this, Morison trades at about 10.58 times book value and 25.42 times sales. Its 2025 accounts were delayed, and the auditor highlighted material uncertainty over its ability to continue as a going concern, with accumulated losses of about N903.9 million. It also previously breached the NGX free-float requirement before correcting it through a private placement. Together, these issues place Morison firmly within the zombie category.

Critical Minerals Financing Company

CMFC has gained about 82.11% year-to-date, but there is little operating activity behind the rally. The company recorded no revenue between 2021 and 2024 and posted losses every year from 2021 to 2025. Return on equity is negative 19.3%, while return on assets is negative 6.3%. Despite this, the stock trades at about four times book value. Investors are paying for a future business that has not appeared in the financial statements. Until CMFC generates revenue or presents a clearer operating strategy, its rally remains largely speculative.

Omatek Ventures

Omatek has gained about 76.11% in 2026 despite an EPS of negative N0.02. Revenue declined from just N3.75 million in 2021 to zero in 2025, while profit after tax has been negative every year since 2021.

For Nigerian investors, these zombie rallies highlight a market driven more by speculation than fundamentals. While some companies may eventually recover, betting on hope without earnings carries real risk, especially for retail traders who may buy at the top of a speculative wave.