Leading stockbroking firms Meristem Securities and CSL Stockbrokers gave two different opinions on Access bank and PZ Cussons Plc in their stock recommendations released this week. While CSL rated Access a buy, Meristem rated it a hold. CSL rated PZ HOLD, while Meristem rated the company as SELL.
HY 2017 results for the bank show gross earnings increased from N174 billion in 2016 to N246 billion in 2017. Profit before tax also increased from N43.9 billion in 2016 to N52 billion in 2017. The bank declared an interim dividend of 25 kobo per share.
Access bank currently has a book value of 0.65 times earnings, making it undervalued. The forecast Price Earnings ratio of 5.41 makes the stocks relatively cheap compared to its tier 1 counterparts like GT bank and Zenith which are trading at 11 times earnings and 7 times earnings respectively.
Access bank shares have appreciated over 65% year to date, and are 11.41% shy of the N11.03 target price set by the stockbroking firm.
PZ Cussons Nigeria Plc
PZ Cussons was incorporated in Nigeria on December 4 1948, but was listed on the Nigerian Stock Exchange in 1972. The company is a subsidiary of PZ Cussons Plc, Manchester, UK. The company is into the sales and manufacture of household and consumer goods as well as electronic appliances.
PZ recently released its FY 2017 results. Turnover increased from N69.5 billion in 2016 to N79.6 billion in 2017. Profit before tax also increased from N3.1 billion in 2016 to N4.8 billion in 2017. The company approved a dividend of 50 kobo per share.
CSL stockbrokers placed a HOLD recommendation on the stock, while Meristem placed a SELL recommendation.
PZ’s forecast Price Earnings ratio of 59 times earnings, means the stock is trading at a significant premium. The stock has also exceeded the target share price of N14 by 44% as it currently trades in the N25 range.
The 72.41% year to date price appreciation, may have informed Meristem’s decision to put a sell rating on the stock. The stock has outperformed the All Share Index which is up 29.6% year to date. The market is currently witnessing a pull back as retail investors sell down their holdings to meet essential expenses, and institutional investors cash in on their profits.