First Bank, UBA, GTCO, Access HoldCo, and Zenith Bank (FUGAZ) continue to secure favourable ratings reflecting promising upside potential.
Analysts’ ratings from Greenwich Merchant Bank, Meristem and Aurthur Steven Asset Management have a consensus “BUY” recommendation on Access Holdco, and GTCO, while FBNH garnered 2 “Hold” Recommendations and 1 “BUY Recommendation. UBA and Zenith Bank garnered 2 “BUY” and 1 “HOLD recommendations
Analysts’ stock recommendations are expert assessments that provide investors with valuable insights into publicly traded companies and their stocks. These recommendations typically fall into three categories (BUY, HOLD, and SELL), each suggesting a different course of action for investors.
The “BUY” and “HOLD” recommendations assigned to the stocks of these banks reflect analysts’ confidence in their potential for future price appreciation.
It considers various factors, including the stocks’ intrinsic or fair value, the positive earnings outlook of the banks, their growth potential, the overall positive trend in the banking sector, consistent dividend income, and other relevant factors.
This reinforces the idea that while a stock’s price movement is significant, it should not be the sole criterion for identifying a promising investment opportunity. Instead, it is often wiser to acquire shares at their “fair value” rather than focusing solely on the current market price.
As of the market close on October 223, 2023, the FUGAZ stocks collectively achieved an impressive year-to-date (YtD) share price average gain of 76.83%.
Additionally, they offered an average dividend yield of 7.94%, and their average trailing-twelve-month price-to-earnings (P/E) ratio stood at 2.35x
This combination of factors makes these stocks an attractive investment opportunity, for both growth-oriented and income-focused investors.
The year-to-date (YtD) price gain, which exceeds the inflation rate, indicates that investors who held these stocks during this period have not only seen an increase in the value of their investments but have also enjoyed a positive real return.
Moreover, investors can look forward to a 7.94% return on their investment through dividends, alongside the potential for capital gains. Furthermore, the relatively modest P/E ratio suggests that these stocks may be attractively priced in relation to their earnings.
UBA stands out as a particularly attractive valuation when considering its earnings, with a P/E (TTM) ratio of 1.39x. This figure is even lower than the average P/E ratio of the five stocks in the group, including UBA.
In addition to its compelling valuation, UBA presently offers a dividend yield of 7.31%. Combining this with its impressive year-to-date (YtD) share price gain of 151.97%, investors can anticipate a total return of 159.28%.
Furthermore, financial experts agree about the stock’s attractiveness. In their stock recommendations dated October 16, 2023, both Meristem and Greenwich have set target prices of N21.33 and N23.70, respectively, resulting in a “BUY” recommendation for the stock. This forecast suggests a potential upside ranging between 22% and 25%.
Zenith Bank also enjoys a “BUY” recommendation from Greenwich Merchant Bank and Arthur Steven Asset Management. ASAM in its weekly stocks’ recommendation of October 23, 2023, set a target price of N36.36, suggesting a potential upside of 10%.
Zenith Bank’s current share price, trading at N33.25 per share, comes with a P/E ratio of 2.58x, slightly above the group’s average P/E ratio of 2.35x.
The stock presents the highest dividend yield of 10.23%, which is an attractive feature for income-focused investors.
However, it’s year-to-date (YtD) share price gain, while not particularly impressive, still provides investors with a total return of 48.77%.
This total return, although not as high as some other stocks within the group, remains favourable as it surpasses the inflation rate. In essence, investors holding the stock still achieved real returns, accounting for the impact of inflation.
Access Holdco and GTCO have relatively higher P/E ratios, standing at 2.95 and 2.66, respectively, compared to the group’s average.
However, analysts from the three Broking Houses maintained a positive outlook on both Access Holdings PLC and Guaranty Trust Holding Company PLC, assigning a unanimous “BUY” recommendation for these stocks.
Access Holdings PLC offers a higher dividend yield of 9.67%, resulting in an impressive total return of 104.37%. GTCO, on the other hand, provides a robust dividend yield of 9.38%, but a lower YtD share price gain, leading to a total return of 62.42%.
Although GTCO offers a lower total return than UBA and Access Holdco, the strong dividend yield makes it an attractive option for income-focused investors.
FBNH, while receiving a “HOLD” recommendation from the two houses and a “BUY” recommendation, stands out with a relatively lower P/E ratio of 2.15x, below the group’s average P/E ratio of 2.34x.
This suggests that it may be undervalued in relation to its earnings.
However, FBNH offers the lowest dividend yield among the five banks at 3.14%., taking its total return to 49.02%., slightly higher than Zenith Bank’s total return of 48%.
Overall, these banks, despite variations in P/E ratios and dividend yields, offer unique strengths that align with a range of investor preferences. The positive ratings they receive underscore their promising upside potential.
However, it is essential to note that these ratings are dynamic and subject to change as new information emerges. Analysts consistently review their recommendations to adapt to evolving market dynamics and company developments.
