FCMB Group Plc is a financial services company whose business activities include the following:
commercial and retail banking
wealth management and
Price and Fair Value
With a stock price of ₦3.03 and an industry median price of ₦4.27, FCMB costs about 28% less than its industry group. If the numbers add up, FCMB could be an attractive option because it appears cheaper than its peers.
On comparing its fair value with its price, we see that the stock trades below half of its intrinsic value, which is ₦8.60. The industry’s median fair value is ₦7.87 and even this is higher than FCMB’s current market price.
We can infer, from FCMB’s price and fair value, that it is presently priced lower than it is worth and its price, therefore, holds the potential to increase to meet its fair value and industry peers.
1 Year Average Daily Volume
FCMB’s shares trade an average of 10 million units daily. This is quite consistent with its industry’s median, which is approximately 10.1 million units. Its liquidity is, therefore reflective of the Nigerian banking industry’s liquidity.
The median capitalization of the Banking industry dropped from ₦125.9 billion last week to ₦67 billion. FCMB’s market capitalization, at the close of the stock market on, Friday, November 20, 2020, was ₦59.9 billion – 10% lower than the industry’s median market capitalization.
FCMB’s Dividend Yield
FCMB Group has a dividend yield (4.62%) that is slightly lower (-6%) than its industry median (4.93%). Recall that we had noticed FCMB’s price is lower than its peers. We would expect that a relatively lower price would lead to a higher dividend yield. FCMB, having a lower dividend yield, suggests that it paid a lower dividend than its industry peers.
FCMB’s Net Profit Margin
With a net profit margin of 17.11%, the company has a slightly better margin than its industry group which sits at 16.25%. It should be noted, again, that most of the variables in this report track the data that was reported in the last twelve months.
With a better profit margin than its peers, over the course of the last year, it could be suggested that its recent margins are better than its peers but that improvement has not been priced into the market yet.
Investors should keep an eye on this factor. If it turns out that it is more profitable, this could lead to higher dividends in the future, and ultimately, better yields.
FCMB’s Price to Book Ratio (P/B Ratio)
With a price-to-book ratio of 0.29, we can suggest, again, that it is a potentially valuable company. Its price-to-book ratio is low enough to confirm that its price is lower than its value. The ratio is also lower than its industry peers, implying that it is a cheaper stock but not any less valuable.
Return on Equity (ROE)
The company has a return on equity of 9.77% while the banking industry’s median ROE is 11.20%. This slightly low return agrees with the low dividend yield that its shareholders have earned. Hmm… There’s just something about these returns to equity investors.
Infographic of the key metrics for FCMB Group
FCMB Group Plc, based on the reviews done above, is not a bad company to own. Its performance does not stand out exceptionally but it also does not take anything away from the company.
The negatives include its lower than the industry median dividend yield and return on equity. The positives include its low price to value and higher than average net profit margin.
If investigations do not return any worry about the slightly lower returns to shareholders, then FCMB has the potential to be a good stock to own.
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.