Stock Anatomy of Access Bank Plc (ACCESS) 23/10/2020.
Our frequent readers may be wondering “Access Bank Plc again?”. You may be thinking that we are picking up ACCESS a little too frequently because it is bubbling up on several visualizations we have been producing. It is just a coincidence as you will see.
The stock anatomy series has a laser focus on stocks that are represented in the NSE 30 index only. You can learn more in our introduction to the stock anatomy post, which explains the idea behind the stock anatomy series as well as explain how to get the best value from it. We pick, in ascending order, businesses in the NSE 30 index based on their alphabetical position in the index. Guess which company is first, based on these criteria. Lol. Your guess is as good as mine.
According to the Global Industry Classification Standard (GICS) taxonomy, Access Bank belongs to the Financials Sector, and Banks Industry Group. Some of its industry group peers include Zenith Bank Plc, Guaranty Trust Bank Plc, Union Bank of Nigeria Plc, Infinity Trust Mortgage Bank Plc, and NPF Micro Finance Bank Plc.
It is engaged in investment, corporate, commercial, and retail banking and its principal activities include the provision of money market product and services, retail banking, granting of loans and advances, equipment leasing, corporate finance, and foreign exchange operations.
Price and Fair Value
Access Bank’s stock price at the close of business on Friday, 23rd October 2020 was ₦7.70. The median price for the Banks industry group on the same day was ₦3.50. This could be interpreted to mean that ACESS is either perceived to be of better value than most banks or that it is overpriced. So, better value or overpriced, how do we know which it is? Let us look at the Fair Value* figures as well.
The median fair value of the Banks group is ₦7.65. What we see is that the current stock price of ACCESS is at per with the median Fair Value of the group. This could be an indication that investors identify that the true value of Nigerian Banks is somewhere in this ₦7.65 range and that ACCESS represents a good average of the group.
The above, however, does not imply that ACCESS’s true value is reflected in the stock’s price. A look at the fair value of ACCESS shows it to be ₦16.12, more than 2x its current price. This could mean that ACCESS is presently underpriced and could move up to meet its true value if its management keeps up great performances and put money to good use.
In a nutshell, ACCESS’s price and fair value point to a company that is perceived to be of higher value than median businesses in the Nigerian Banking Industry.
1 Year Average Daily Volume – Measure of Liquidity
The average daily volume is a figure that gives an estimate of how many shares an investor can expect to see trade every day the market is open.
Average daily volume gives a rough idea of how liquid a stock is. By liquid, we mean the ease of buying and selling a stock. A stock that has more shares traded daily is said to be more liquid than a stock that has fewer shares traded daily.
ACCESS has an average daily volume of approximately 22 million shares. In contrast, the median of the banking industry is approximately 10 million shares traded daily. This implies that ACCESS is more liquid than most banks that trade on the Nigerian Stock Exchange by a ratio of more than 2:1.
Market Capitalization – Measure of Size
The market capitalization of ACESS is ₦273.6 billion. In comparison, the Banking Industry has a median market capitalization of ₦85.5 billion. Once again, ACCESS is a larger (by size) bank than most banks on the Nigerian Stock Exchange. On a classification basis, you could say that ACCESS is either at least a mid-cap bank or a large-cap Nigerian bank.
ACCESS has a dividend yield (based on dividends paid in the last twelve months) of 8.44% while the Banking Industry has a median dividend yield of 6.69% ACCESS’s yield is better than the industry median but you can say it is just barely above the median, not significantly above the median. What this implies is that the return (dividend) that investors got by investing in ACCESS is better than the returns received by investors who bought the stocks of most other banks.
Net Profit Margin
The net profit margin (based on profit and revenues generated within the last twelve months) of ACCESS is 15.28% while the industry average ratio is 16.71%. This infers that ACCESS was less able to generate profits from its revenue than most banks on the stock exchange could. While this may look like a cause for alarm, investors need to know that ACCESS’s number isn’t too far from the median and, also, that a profit is still a profit. There are some good reasons why the profitability could be lower, and a review of the financials could show why. What investors do not want to see is ACCESS subsequently generating lower margins than the industry in subsequent periods as that could be showing a trend or other indications of potential worries.
Price to Earnings Ratio (PE Ratio)
ACCESS has a price to earnings ratio (based on earnings in the last twelve months) of 2.71 while the industry median ratio is 2.95. Generally, a lower price to book ratio indicates that the company’s current price is lower than the true worth of the company and vice versa. With PE ratios, investors like to find companies with ratios between 0 and 20. Higher than 20 and you are looking at a company that is currently priced higher than it is worth and vice versa.
With ACCESS having a PE Ratio closer to 0 and close to its industry’s median, it indicates that both ACCESS and its industry are high-value candidates for investors.
Return on Equity (ROE)
ACCESS has an ROE value (based on returns earned in the last twelve months) of 15.45%. The banking industry’s median is 11.05% This implies that ACCESS’s equity owners witnessed their company generate higher returns on their equity than most banks in the country.
These statistics point to ACCESS as a company that is performing better than most of its peers in several key areas. Investors, though need to keep a close eye on its profitability and some return variables. The company has a net positive return and profitability but is below the missile line for some of these variables. A rise in these stats should give investors the needed confidence to continue to hold or invest in the business. A continued below-par performance in these few areas or a further decline below industry average in other variables should get investors asking “what’s going on?.
To close, we would like to speak to the investor who does not want to wait for a weekly update. You might want access to the data that built this and we will say that we have you covered. A majority of the information that powers this resides in our Company Profiler. You can get access to a lot of information by visiting that site.
Taiwo Megbope is the Co-founder and Chief Growth Officer at Investor Hangout.
He is tasked with ensuring and managing the growth of the Investor Hangout project. His responsibilities include creating and implementing the project's vision as well as executing growth-generating strategies.
Taiwo is an avid researcher and autodidact. In his spare time, he enjoys spending time with his family and friends.