Nestle Nigeria Plc released its 2012 9 months unaudited accounts with revenue jumping 20.5% to N85b. Gross profit also increased year on year by 23% to N35b. The company will then go ahead to post a pre-tax profit of N18.8b for the first 9 months of the year, a whopping 41% higher year on year.
If there is one example of what a profitable, well run and robust company, then Nestle has got to be a perfect example. With this result, the company basically ticking off on all profitability metrics. Return on Equity was a whopping 57% and earnings per share rising 63% year on year to N19.4. The company is also a cash cow, generating a net operational cash flow of N17b. Whilst it appeared to have doubled down on cash spent on investment (from N11.7b in 2011 to N5.8b in 2012) it was able to maintain the net cash paid on debts at N7.5b closing the period over N500m of in cash.
At N670 per share (as at time of this post) the company is priced at 34x its current earnings per share and 56x its trailing unaudited earnings per share. This makes it out of the reach for peeps like me. At N670 the share price is 65% higher than the N405 of about a year ago. It’s actually risen highest to N695 this year. A price of about N200 is ideal for bargain hunters like me but then some will consider that wishful thinking. At a revenue growth rate of 20.5% and increase in profit after tax of over 63% the share price as it currently stands may just be apt for bullish investors. The growth in share price is in tandem with growth in earnings which after all is why shares get the values assigned to them. The valuation of a company has much to do with the growth expectations people place on them. Nestle currently proves just that.
Nestle’s unaudited 2012 9 months accounts is posted on the website of the NSE