Buy/Sell/Hold is a weekly column which samples opinions on a variety of stocks, that are picked from gainers and losers of the previous week, as well as analyst reports by several investment houses.
Here are the stocks on our list for the week ending 8th June 2018.
Eterna Oil: HOLD
Latest results: Results for the first quarter ended March 2018 show that revenue increased from N51.9 billion in 2017 to N54.3 billion in 2018. Profit before tax, however, dropped from N1 billion in 2017 to N750 million in 2018. Profit after tax also dropped from N681 million in 2017 to N510 million in 2018.
Current Share Price: N6.64
Price Earnings ratio: 4.11x
Price to Book ratio: 0.69
Year-to-date: 63.55%
One year return: 97%
External View: Nil
Our view: Eterna Oil is a HOLD in Nairametrics’ view. The stock is currently trading at a lower PE ratio compared to other firms in the sector such as Total, which is trading at 9.7 times earnings, and Forte Oil which is trading 19.7 times earnings.
The stock is also trading at less than 10% below its year high of N7.
Unilever: HOLD
Latest results: Results for the first quarter ended March 2018 show that revenue increased from N22.1 billion in 2017 to N25.8 billion in 2018. Profit before tax also moved from N2.1 billion in 2017 to N3.9 billion in 2018. Profit after tax also jumped from N1.6 billion in 2017 to N2.8 billion in 2018.
Current Share Price: N51.45
Price Earnings ratio: 27.53
Price to Book ratio: 3.75
Year-to-date: 25.49%
One Year return: 52.3%
External View:
Analysts at FBNQuest have an Underperform rating on Unilever. They have a target price of N43.1 which is 16.2% lower than the N51.5 price as at when the report was prepared.
Analysts at Afrinvest have a Sell rating on the stock. They have a 12-month target price of N42.46 which is 13.3% lower than its current price of N49 as at when the report was prepared.
Our View
Nairametrics regards Unilever as a HOLD The stock is currently trading 15.7% below its year high of N64.6
International Breweries
Latest Results: Results for the first quarter ended March 2018 show that the company made N25.9 billion as revenue. Profit before tax stood at N1 billion, while the firm made a loss after tax of N2.2 billion.
Current Share Price: N39.00
Price Earnings ratio: 40.05X
Price to Book ratio: 9.29
Year-to-date: -28.44%
One Year return: 61.22%
External view
Analysts at FBNQuest have a Neutral rating on the stock. They have a target price of N47 per share which indicates an upside of 17.9% from the stock’s price of N40.02 as at when the report was prepared.
Our View
International Breweries is a SELL in our opinion. The stock is trading at a premium compared to its peers like Guinness, which is trading at 18 times earnings and Nigerian Breweries, which is trading at 26 times earnings.
The stock is currently trading 39% below its year high of N64. Current market sentiments mean that the stock could witness further correction this week.
Union Bank: SELL
Latest Results: Gross earnings increased from N34.3 billion in 2017 to N39.4 billion in 2018. Profit before tax increased from N4.6 billion in 2017 to N5.4 billion in 2018. Profit after tax also increased from N4.5 billion in 2017 to N5.2 billion in 2018.
Current Share Price: N5.63
Price Earnings ratio: 7.62X
Price to Book ratio: 0.55
Year-to-date: -32.05%
One Year return: 9.62%
External View
Analysts at Afrinvest have a REDUCE rating on the stock. They have a 12-month target price of N5.65 which is 7.4% less than N6.10 at which the report was prepared.
Our view
Union Bank is a SELL in our opinion. The stock is trading at a premium compared to bigger tier two banks such as Fidelity which is trading at 1.56 times earnings and FCMB trading at 4.26 times earnings.
This is not a buy sell or hold recommendation. Remember to consult a competent financial analyst or stockbroker if you need help with your investment decisions.