Eterna Oil Plc is a small cap company that operates in the downstream petroleum industry. Small cap companies are those with a share value of less than N100 billion. The company has a market capitalization of N4.5 billion. Market capitalization of a company is the total number of a company’s shares multiplied by its share price.
Half Year 2017 results show the revenue increased from N40.7 billion in 2016 to N79.6 billion in 2017. Profit before tax increased from N1.4 billion in 2016 to N1.5 billion in 2017. Earnings per also increased from 75 kobo in 2016 to 80 kobo in 2017, suggesting the company could exceed its 2016 full year Earnings Per Share of N1.13.
FY 2016 Earnings Per Share means the stock is trading at a Price Earnings (PE) ratio of 3 times earnings making it one of the cheapest in the sector. Total Plc is currently trading at aPE ratio of 3 times earnings. Year to date, Eterna Oil Plc shares are up 6.45%, lagging behind the NSE All Share Index which is up 32.05%.
Petroleum stocks are negative this year, with the exception of Eterna Oil Plc, Seplat Plc and Oando Plc which are up year to date 18.42% and 24.04% respectively. Investors may be bearish on the sector as the likelihood of replicating2016 results are quite slim. Companies in the petroleum sub sector had fantastic 2016 results largely due to the increase in pump prices that occurred within the year.
In view of the company’s low PE ratio, and position as a growth stock, Nairametrics rates the stock a BUY.
Eterna Oil was incorporated on the 13th of January 1989 as Eterna Oil and Gas Limited. The company commenced operations in 1991, and was listed on the Nigerian Stock Exchange in 1998.