NigerianStocksToBuy

Welcome, Guest: Join NigerianStocksToBuy / LOGIN! / Terms and Conditions / News
Stats: 59 members, 88 topics. Date: Monday, 20th May 2019

 

Looking for an Undervalued Penny Stock in the Banking Sector?

NigerianStocksToBuy Forum / Looking for an Undervalued Penny Stock in the Banking Sector? / Category / Company Analysis, Top Gaining Stocks / Looking for an Undervalued Penny Stock in the Banking Sector?

2 Growth Stocks You Can’t Afford to Miss in 2019 / At What Price Will CCNN Stock Turnaround? / Is The New Access Bank Destined for Greatness? / Is It Worth Buying Stanbic IBTC Despite Higher Prices? / Why Shares of Oando is Rising Amidst Huge Debt. /

() (Reply)

Looking for an Undervalued Penny Stock in the Banking Sector? by : 5:59 pm On November 5, 2018

"Click Here To See How I Earn Up to 20 - 39% Return From These Untapped & Secured Fixed Deposit Investments in Nigeria

While everyone is cautious about buying stocks in the NSE market on growing bearish sentiments, Sterlings bank’s stock seems to have shown some resistance last week as it appreciated by 6.67% to close at ₦1.60, from an opening price of ₦1.5. This might be one of the undervalued bank stocks to buy in the Nigeria stock market.

You are strongly advised to do you own research.

The upward move in the share price isn’t unconnected to the bank’s impressive Q3 results which showed revenue, interest income and profit on double-digit growth trajectory.

As of this analysis, the stock is selling for ₦1.65 with 1-year and YTD performance now at 57.17% and 48.15% respectively.

Analysis Recent Result

Results for the 9-month ended September 2018 show that interest income increased from ₦78.6 billion in 2017 to ₦93.5 billion in 2018, 18.9% growth.

Profit before tax jumped by 30%; from ₦6.5 billion in 2017 to ₦8.5 billion in 2018. Profit after tax increased by 38%; from ₦5.9billion in 2017 to ₦8.2billion in 2018.

In summary, the bank’s bottom line was largely supported by efficient utilization of customers’ deposit on loan and over 50% reduction in impairment charges. This is coming at a time other top tier banks (GTB, Zenith, UBA, FirstBank) are cutting down on their loan book which unsuprisingly affected interest income.

The bank has a Return on Equity 10%, Return on Asset of 1% while Net Interest Margin is 7%

READ  Analysis of Dangote Sugar Refiney's Stock

Customer’s deposit, a measure of customers’ confidence in the bank, also grew by 5% to ₦723 billion from ₦684 billion. This also translated to increased lending to the private sector, as loan and advances to customers increased from ₦662 billion from ₦598 billion.

OPEX increased by 54% as the bank incurred more cost on administrative expenses.

Cash generated from operations on the Q3 report is ₦7.6 b (compared to a negative cash flow ₦100 billion in the previous comparable period)

Technical Analysis

Sterlings bank share price is trading for ₦1.65, above its 50-day average of ₦1.52 and 20-day moving average price of ₦1.43.

Generally, a stock is bullish on a short and long term when its share price is above 50-day and 200-day moving averages respectively.

With the price showing a recent cross above the 200-day SMA of ₦1.50, Sterlings bank might be set for an impressive long-term bullish run

undervalued bank stocks to buy

Valuation

Sterlings bank reported a 9-month EPS of 28k, which is 33% more than the EPS of 21k in the comparable period (2017).

Using an adjusted discount rate of 15%, an assumed zero growth on TTM EPS of 37k we assign a fair value of ₦2.46 to the stock, which is 49% above the current share price of ₦1.65.

Besides, the banking stock has a forward PE ratio of 4.45 which is below industry average; there is room for upside.

Market update

No update on

Recommendation

We assign a BUY rating on Sterlings bank’s stock.

About Sterlings Bank Plc

Sterling Bank PLC provides banking products and services to personal and business customers. The Bank offers services in corporate/commercial banking, retail & consumer banking, financial investments and management services, capital markets, insurance, and other financial services.

"Click Here To See How I Earn Up to 20 - 39% Return From These Untapped & Secured Fixed Deposit Investments in Nigeria

READ  How to Pick Great Nigerian Stocks To Buy Using Quarterly Result

"Click Here To See How I Make Real Profit from Nigeria Stocks

Comments are closed.

() (Reply)

2 Growth Stocks You Can’t Afford to Miss in 2019 / At What Price Will CCNN Stock Turnaround? / Is The New Access Bank Destined for Greatness? / Is It Worth Buying Stanbic IBTC Despite Higher Prices? / Why Shares of Oando is Rising Amidst Huge Debt. /  

(Go Up)

Put your Text Adverts Here...

Sections: Top Gaining Stocks Stock Trading Strategies Alternative Investment Options

NigerianStocksToBuy - Copyright © 2018 - All rights reserved. See How To Advertise.
Disclaimer: Every member is solely responsible for anything that he/she posts or uploads on Nigerian Stock Market Blog.

error: Content is protected !!
Read more:
custodian investment share price
Will NSE Index Go Up or Down After Election? Here a Technical Analysis

The NSE Index has recorded impressive appreciation. On a year-to-date basis, the index is up by 3.45% as investors take...

Nigerian Banking Stocks – 2018 Sector Outlook & Key Growth Driver

Best Nigerian Banking Stocks To Buy - 2018 Outlook & Forecast - Learn How To Trade Nigerian Stock Markets Online,...

Close