Financial Ratio Based Valuation in an Emerging Market: Evidence from Omantel and Investor Pricing Behaviour

Diana Fernandez, Moza Salim Al Busaidi, Safiya Ahmed Al Sarmi, Hala Mohammed Al Nabhani, Nada Abdullah Al Abri and Zeena Mohammed Al Rauuahi
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Diana Fernandez: College of Economics and Business Administration, University of Technology and Applied Sciences (UTAS), Nizwa, Sultanate of Oman.
Moza Salim Al Busaidi: College of Economics and Business Administration, University of Technology and Applied Sciences (UTAS), Nizwa, Sultanate of Oman.
Safiya Ahmed Al Sarmi: College of Economics and Business Administration, University of Technology and Applied Sciences (UTAS), Nizwa, Sultanate of Oman.
Hala Mohammed Al Nabhani: College of Economics and Business Administration, University of Technology and Applied Sciences (UTAS), Nizwa, Sultanate of Oman.
Nada Abdullah Al Abri: College of Economics and Business Administration, University of Technology and Applied Sciences (UTAS), Nizwa, Sultanate of Oman.
Zeena Mohammed Al Rauuahi: College of Economics and Business Administration, University of Technology and Applied Sciences (UTAS), Nizwa, Sultanate of Oman.

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Abstract: Financial ratios remain widely used indicators for assessing firm performance, market valuation and investor pricing behaviour. This study examines the relationship between selected financial ratios and stock price movements in Omantel, Oman's leading telecommunications company, over the period 2005–2024. Using secondary data from audited financial statements and stock market records, the study evaluates seven financial indicators: Earnings Per Share (EPS), Price-to-Earnings Ratio (P/E), Dividend Yield (D/Y), Return on Equity (ROE), Return on Assets (ROA), Debt-to-Equity Ratio (D/E) and Price-to-Book Ratio (P/B). Correlation analysis and multiple linear regression were applied to assess the explanatory strength of these indicators in relation to Omantel's market price per share. The findings show that EPS and the P/E ratio are the most significant predictors of stock price, with both demonstrating positive effects. Dividend Yield approached statistical significance, while ROA, ROE, D/E and P/B did not show significant effects in the regression model. The model reported strong explanatory power, with an R² value of 0.938, indicating that the selected financial ratios explain a substantial proportion of variation in Omantel's stock price. The study suggests that earnings-related and valuation-based measures play a central role in investor pricing behaviour in Oman's emerging capital market.

Date: 2026
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Published in Economics, Business and Management: Recent Advances Vol. 2, BP International, pp.102-119, 2026

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05687089

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