Cadbury Nigeria Plc and Nestlé Nigeria Plc, two players in the food production-diversified sub-sector of the Nigerian Exchange, have delivered impressive stock market performances in 2025.
Cadbury has stolen the spotlight with 193% year-to-date gain, while Nestlé has followed closely with an impressive 114% rise as of September 2025.
This rally stands in sharp contrast to their 2024 outcomes, when Cadbury posted a modest 26% gain and Nestlé slipped 20% into the red.
Now, with both stocks trading close to their 52-week highs, Cadbury at 89% and Nestlé at 99%, the big question for investors is whether this momentum can be sustained in the final quarter of the year, and more importantly, which of the two offers the better value going forward.
Overall, Cadbury has better growth, with higher profit margins, better efficiency ratios, and the strongest year-to-date share price performance.
- However, its negative earnings per share and weak operating cash flow raise concerns about whether this momentum can last.
Nestlé, on the other hand, trades at a higher valuation multiple, but it offers scale, consistent profitability, and strong cash generation.
- Despite its balance sheet challenges, its earnings are backed by cash flow, making it a more solid play for long-term stability.
The coming quarters will show how both companies sustain their momentum.
But first, let’s understand how they got here.
Sector Backdrop
Their sector, consumer goods, has been one of the standout performers on the Nigerian Exchange in 2025.
The Consumer Goods Index has surged 96% YtD as of September 2025, outstripping the All-Share Index’s (ASI) 38.33% gain and far more than the 39.5% sector gain recorded over the same period in 2024.
The listed consumer goods companies boasted a combined market capitalization of N19.86 trillion of the total market cap of N90.59 trillion, a sharp rise from N11.2 trillion in 2024.
Turning back to Cadbury and Nestlé, while Cadbury leads in year-to-date share price growth, Nestlé dominates in market value.
Nestlé’s market capitalization stood at N1.48 trillion compared to Cadbury’s N144 billion, giving both a combined N1.63 trillion as of September 30, 2025, up sharply from N743 billion in December 2024.
This sets the stage for a deeper look at how both companies stack up on fundamentals and valuation.
Financial performance
In the first half of 2025, both Cadbury and Nestlé delivered strong earnings, though their growth stories reflect different strengths.
Nestlé led in absolute numbers and scale, while Cadbury outperformed in growth momentum.
Both companies staged a comeback from heavy losses recorded a year earlier.
Cadbury swung from a loss of N9.72 billion in H1 2024 to a profit of N10.18 billion in H1 2025, while Nestlé rebounded from a staggering N177 billion loss in H1 2024 to a profit of N50.57 billion in H1 2025.
- Profitability also tells an interesting story: Cadbury posted a stronger profit margin of 13%, compared to Nestlé’s 9%, highlighting its efficiency in converting revenue into bottom-line gains despite being much smaller in size.
The rebound in 2025 is particularly encouraging for both shareholders and investors, considering that the heavy losses in 2023 and 2024 had left the companies with accumulated losses of N42.71 billion for Cadbury and a much larger N116 billion for Nestlé over a five-year period.
Verdict here:
- Nestlé remains the clear leader in scale, generating far larger absolute profits, but Cadbury’s sharper turnaround and stronger margins make it the most efficient growth story in H1 2025.
The drivers:
A cursory review of the financials shows that while both companies recorded revenue growth, which drove stronger operating profit, their turnaround was also buoyed by a reversal in foreign exchange losses to gains.
- Cadbury swung from a foreign exchange loss of about N16 billion in H1 2024 to a modest gain of N249 million in H1 2025, while Nestlé recovered from a massive N264 billion loss to a gain of N3 billion over the same period.
- Operationally, Nestlé was stronger in absolute terms, delivering higher profit and demonstrating efficiency on a scale.
- However, Cadbury recorded higher growth in operating profit, reflecting sharper recovery momentum relative to its size.
Balance sheet
Nestlé dominates the balance sheet position of the two companies, accounting for about 91% of their combined N946 billion asset base.
On the liabilities side, both companies continue to grapple with accumulated losses.
- Nestlé’s retained losses stood at N193 billion in H1 2025, contributing to negative shareholders’ funds of N41.7 billion.
- However, this marks a notable improvement from the -N92.3 billion recorded in 2024, suggesting that with sustained profitability in H2 2025, Nestlé could exit negative equity, even if retained losses are not fully erased.
Cadbury’s balance sheet looks comparatively healthier.
- Retained losses declined to N27 billion in H1 2025, enabling shareholders’ funds to climb to N14.55 billion.
- If its H1 profit performance is sustained into H2, Cadbury has a stronger chance of eliminating retained losses by year-end, potentially restoring balance sheet strength ahead of Nestlé.
Valuation and outlook
A comparison of efficiency, leverage, and valuation metrics highlights the trade-offs between Cadbury and Nestlé.
- Regarding operational strength, Cadbury shows better efficiency, with an interest coverage ratio of 7.63x against Nestlé’s 2.82x, and an asset turnover of 0.88 compared to Nestlé’s 0.65.
- This suggests that Cadbury is using its assets more effectively to generate sales and has a stronger capacity to service interest obligations.
- Nestlé, however, carries higher leverage with a debt-to-asset ratio of 64%, well above Cadbury’s 37%.
- Liquidity is a weak point for both firms, as neither has a current ratio above 1, but Nestlé fares slightly better at 0.91 versus Cadbury’s 0.73, implying tighter short-term solvency for Cadbury.
A key differentiator is operating cash flow.
- In H1 2025, Cadbury reported a negative cash flow of -N1.3 billion, raising questions about the sustainability of its earnings recovery.
- In contrast, Nestlé generated a robust N187 billion in operating cash flow, reinforcing the strength of its earnings quality and ability to finance operations internally.
Valuation
The market is still optimistic about both stocks, but in different ways.
- For Cadbury, earnings are still negative on a trailing basis (N-1.05), so the usual P/E measure doesn’t really apply. Instead, its price-to-book ratio of 9.87x shows investors are paying a big premium compared to the company’s net assets. However, its price-to-sales ratio of 0.93x suggests the stock is not overpriced relative to its revenues.
- For Nestlé, the turnaround in earnings has lifted its trailing EPS to N79.34, leaving the stock trading at a P/E of 23.6x. Its P/S ratio of 1.32x also reflects that investors are willing to pay more per unit of sales.
Cadbury may look “cheaper” on paper, but Nestlé offers better value in real terms because its earnings and cash flow support the market price.
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