Stocks on our Buy/Sell/Hold list are picked from the gainers and losers of the previous week, as well as various analysts’ reports.
Diamond Bank: HOLD
Recent Results:
Results for the third quarter ended September 30, 2018, show that gross earnings declined from N143 billion in 2017 to N142 billion in 2018. Profit before tax fell from N4.7 billion in 2017 to N3 billion in 2018. Profit after tax also dropped from N3.9 billion in 2017 to N1.6 billion in 2018.
Price Information
Current Share Price: N0.86
Price to Earnings Ratio: —
Price to Book Ratio: 0.09
Year to Date: -36.67%
One Year Return: -13.64%
- Diamond has no PE ratio because the bank recorded a loss in the 2017 financial year.
External View
Analysts at Afrinvest have a ‘Reduce’ rating on the stock. This is due to the stock trading at N1.28, which is 3.1% higher than the 12-month target price of N1.24 set by the firm.
Analysts at United Capital have a ‘Buy’ rating on the stock. They have a twelve-month target price of N2.10, which represents a 78% upside from the stock’s price of N1.20, as at when the report was prepared.
Our View
Diamond Bank is a HOLD in Nairametrics’ opinion. The stock has fallen sharply in trading this week and closed at a year low of N0.95 in yesterday’s trading session. The stock had dipped to N0.86 in intraday trading.
The decline in share price may be due to reports of the bank reportedly being considered for acquisition by Access Bank. The two banks have since issued statements denying such claims.
Investors would be better off waiting for more clarity from its conference call before deciding their next move.
Seplat: HOLD
Recent Results:
Results for the nine months ended September 30, 2018, show that revenue jumped from ₦85.1 billion in 2017 to ₦173 billion in 2018.
Profit before tax stood at ₦65 billion in 2018, compared to a loss before tax of ₦650 million in 2017. Profit after tax stood at ₦27.9 billion in 2018, compared to a loss of ₦1.6 billion made in 2017.
Price Information
Current Share Price: N652.70
Price to Earnings Ratio: 2.85x
Price to Book Ratio: 0.6
Year to Date Return: 4.23%
One Year Return: 38.86%
External View
Analysts at United Capital have a ‘Buy’ rating on the stock. They have a 12-month target price of N867.70, which represents a potential upside of 35.6% from the stock’s price of N640, as at when the report was prepared.
Our View
Seplat is a HOLD in our opinion. The stock is 4.23% year to date, so investors desirous of taking a position may have to wait for a significant price correction before doing so.
The company has, however, had a stellar 2018 so far, and hopes of a severe price decline are unlikely, barring a sharp fall in global crude oil prices.
Nestle: HOLD
Recent Results:
Results for the third quarter ended September 30, 2018, show that revenue increased from N185 billion in 2017 to N203 billion in 2018. Profit before tax jumped from N34.4 billion in 2017 to N48 billion in 2018. Profit after tax also surged from N22.9 billion in 2017 to N33.1 billion in 2018. This represents a 44.5% increase year on year.
Price information
Current Share Price: N1,500
Price to Earnings Ratio: 27.11X
Price to Book Ratio: 21
External View
Analysts at Afrinvest have a ‘Sell’ rating on the stock. They have a 12-month target price of N1,236.32, which represents a 15.3% potential decline from the stock’s price of N1,460 as at when the report was prepared.
Analysts at United Capital have a ‘Hold’ recommendation on the stock. They have a 12 month target price of N1,506.50, which represents a potential upside of 5.3% from the stock’s price of N1,430 as at when the report was prepared.
Our View
Nestle Nigeria Plc is a HOLD in Nairametrics’ opinion. The stock is down 3.60% year to date, but may not witness serious decline due to its largely illiquid nature. Investors keen on entry are better off waiting for a sharp decline before doing so.
