Three Stocks to either Buy, Sell or Hold this week

Buy/Sell/Hold is a weekly column which samples opinions on a variety of stocks. Stocks 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 Buy Sell or Hold list for the week ending 11th May 2018

Zenith Bank- BUY

Latest Results: Results for the first quarter ended March 2018 shows that gross earnings  increased from N147 billion in 2017 to N169 billion in 2018. Profit before tax also increased from N44.2 billion in 2017 to N54 billion in 2018.

Pricing

Current Share Price – N27.45

Price to earnings ratio: 4.59x

Price to book ratio: 1.17

Year to date return: 7.06%

One year return: 86.78%

Analysts View

 Analysts at ARM Investment Managers have rated the stock a STRONG BUY. They have an expected target price of N35.25, which is an expected upside of 28.42% from its current price of  N27.45.

Analysts at Afrinvest have placed an ACCUMULATE rating on the stock. They have a 12 month target price of  N31.96 which is a 16.6% upside from the N27.40, the stock traded as at when the report was written.

Our View

 Zenith Bank is trading at a discount compared to other tier one peers such as Access bank which is trading at 5.5 times earnings and GT bank which is trading at 7.3 times earnings. In Nairametrics’ view, the stock is a BUY.

Dangote Flour Mills- BUY

Latest results:  Results for three months ended March 2018 show that revenue fell from N29 billion in 2017 to N26.2 billion in 2018. Profit before  tax also fell from N3.9 billion in 2017 to N2.2 billion in 2018.

Pricing

Current Share Price– N11.45

Price to earnings ratio: 3.70x

Price to book ratio:  1.60

Year to date return: -5.76%

One year return: 170.27%

External view: NONE

Our view:

Dangote Flour is a BUY in our opinion. The stock is trading at a lower price earnings ratio compared to its peer, Honeywell Flour Mills, which is trading at 4.7 times earnings. The stock is also down 5.76% year to date, and is 32% below its year high of N16.90.

Dangote Cement-HOLD

Latest results: For the 3 months ended March 2018, revenue increased from N208 billion in 2017 to N242 billion in 2018. Profit before tax also increased from N77.3 billion in 2017 to N108 billion in 2018.

Pricing

Current Share Price -N248

Price to earnings ratio: 21.44x

Price to book ratio:  4.97

Year to date return: 7.83%

One year return: 70.48%

Analysts View

Analysts at ARM Securities placed a neutral rating on the stock. This is currently being reviewed. The stock was trading at N265 on the date of publication, higher than its last target price of N256.85.

Analysts at Afrinvest have placed an ACCUMULATE rating based on their expected upside of 10.2%.

Our View

Dangote Cement is a HOLD in Nairametrics’ view. The stock is currently trading at a PE ratio lower than other companies in the cement space namely Lafarge and CCNN which is trading at 7 times earnings.

The stock is also trading at about 10.7% lower than its current year high.

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.