Financial Ratios and Stock Price Movements in an Emerging Market: An Empirical Study of Omantel’s Valuation Drivers

Abstract

This study examines the influence of key financial ratios on the share price movements of Omantel, Oman’s leading telecommunications company, over a 20-year period (2005–2024). Utilizing correlation and multiple linear regression analyses, the study evaluates the predictive power of 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). The findings identify EPS and P/E as the most significant predictors of stock price, both demonstrating strong positive effects. D/Y shows marginal significance, whereas ROA, ROE, D/E, and P/B display no statistically significant impact. The regression model exhibits high explanatory power (R² = 0.938), underscoring the centrality of profitability and valuation metrics in equity pricing within Oman’s capital market. These results offer empirical insight into investor behavior in emerging markets and contribute to the broader financial literature by contextualizing performance indicators within a frontier market setting.