[ANALYSIS] 7up Could Hit N200 on Monday but Is It Worth it?

Seven Up Plc closed the week at N194 on Friday gaining 7% and joining the top ten gainers for the week. The stock has been rallying despite the bearishness of the current market as investors continue to value it higher.

Why the rally?

Seven Up closed its register for dividend on the 17th of July 2015 and got its shares subsequently marked down. As at the date it was marked down, its share price was N188.9 to N185. Seven Up declared a dividend of just N2.75.

Following the marking down investors poured in more money for the stock pushing the share price higher to N194 by the end of the week. Volume was just about 415,000 shares valued at about N78.8 million.

Seven is perhaps in high demand following an impressive its impressive full year results (released in March). This is quite surprising considering the poor dividend payout of just N2.75 or 1.4% dividend yield based on its share price the last day before it was marked down.

Will it get to N200?

Anything can happen in this market and as such a N200 share price is not farfetched. At N194 all it needs to get to N200 is another 3% increase next week. Seven Up has Year to Date returned 19% year to date making it one of the top performers this year. See other stats below

Is it worth it?

Seven Up currently looks over valued by our estimates as we do not see this growth pattern in earnings continuing. EPS Growth rate as tapered to about 10% annually compared to an average of over 70% it was churning out between 2011 and 2014. Add that to the lowering consumer demand due to the failing economy and you expect more headwinds. The FMCG & F&B companies have been reporting weaker margins and one will expect this to hit 7up anytime soon.