Buy/Sell/Hold, Guaranty Trust Bank, Nigeria Stock Excahnge

Stocks to Buy/Sell/Hold are drawn from top gainers and losers of the previous week, as well as various analysts’ reports. 

Guaranty Trust Bank: Hold  

Recent ResultsResults for the first quarter ended March 2019 show that Gross earnings for the period grew from ₦109.0billion posted in 2018, to ₦110.3billion in 2019.  

Profit before tax increased from N52.6 billion in 2018 to N56.9 billion in 2019. Profit after tax rose from N44.6 billion in 2018 to N49.3 billion in 2019. 

Price Information 

Current Share Price: N30  

Price to Earnings Ratio: 4.47X 

Price to Book Ratio: 1.4 

Year to Date Return: -12.92%  

One Year Return: -19.06%  

External View 

Analysts at FBNQuest have an Overperform rating on the stock. They have a target price of  N48.00, which represents a potential upside of 67.1% from the stock’s price of N29, as at when the report was prepared. 

Analysts at United Capital have a Buy recommendation on the stock. They have a 12 month target price of N46.7, which represents a potential upside of 61% from the stock’s price of N29, as at when the report was prepared.  

Our View  

Guaranty Trust Bank is a HOLD in Nairametrics opinion. While the stock has underperformed the All Share Index which is down 8.65% year to date, the stock is trading largely within range of its peer, Zenith Bank, which is trading at 3.42 times earnings. 

The stock is also trading well below the average PE ratio on the NSE, of 7.2 times earnings. 

Presco Plc: Hold  

Recent Results: Results for the first quarter ended March 2019 show that revenue fell from N6.5 billion in 2018 to N5.5 billion in 2019. Profit before tax fell from N3.4 billion in 2018 to N2.5 billion in 2019. Profit after tax declined by N2.5 billion in 2018 to N2.1 billion in 2019.  

Price Information 

Current Share Price: N44.80 

Price to Earnings Ratio: 11.71X

Price to Book Ratio: 1.70  

Year to Date Return: -30%  

One Year Return: -36.33%  

External View 

Analysts at FBNQuest have a Neutral rating. They have a target price of N48.60, which represents a potential upside of 3.8% from the stock’s price of N46.80, as at when the report was prepared.  

Analysts at United Capital have a Buy rating on the stock. They have a one year target price of N74.50, which represents a potential upside of 59% from the stock’s price of N46.80, as at when the report was prepared.  

Our View 

Presco Plc is a HOLD in Nairametrics opinion. The stock is trading at a PE ratio within range of Okomu Oil, its peer which is trading at a PE ratio of 9.8 times earnings.  

Coronation Research

It has also not declined sufficiently year to date, to warrant entry. if year to date declines hit the 50% mark, Nairametrics will review its recommendation. 

Flour Mills: SELL  

Recent resultsResults for the nine months ended December 2018, show that revenue fell from N427 billion in 2017 to N400 billion in 2018. Profit before tax fell from N19.5 billion in 2017 to N11.2 billion in 2018. Profit after tax also dropped from N13.2 billion in 2017 to N7.8 billion in 2018.  

Price Information 

Current Share Price: N16.20  

Price to Earnings Ratio:  7.49X 

Price to Book Ratio: 0.45 

Year to Date Return: -29.87%  

One Year Return: -45.18% 

External View 

Analysts at United Capital have a Buy recommendation on the stock. They have a 12 month target price of N27.20, which represents a potential upside of 81.3% from the stock’s price of N15, as at when the report was prepared.  

Analysts at FBNQuest have a Neutral’ rating on the stock. They have a target price of N23.3. which represents a potential upside of 66.3% from the stock’s price of N14, as at when the report was prepared. 

Our View 

Flour Mills is a SELL in Nairametrics opinion, largely due to fundamental reasons. The company’s full year numbers are likely to come in much lower than the previous year. 

Operators in the flour milling space such as Honeywell Flour and Northern Nigeria Flour Mills have also turned in disappointing numbers.  

Disclaimer 

Please consult a financial adviser before making an investment decision. 

 

 

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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