Using value investing approach, the earnings yield performance and P.E ratio have been employed to screen the banking stocks. To this regard, the stocks have been ranked according to their undervalue posture, considering long term investment objectives.
The earnings yield has been the key and simple valuation matrix used to position these stocks properly as the matrix reflects how investors/traders position/value the stocks without bias.
Earnings yield in percentage represents the return on every unity of money invested that should be earned by the company.
Diamond bank appeared leading the list with highest earnings yield of 31.30%, which has positioned the bank as most undervalued stock in the sector. This has placed the stock in a high-ranked long term category.
Though, Wema bank should be topping the list but not on this list as the bank just presented their Q4’2011 result as against Q3’2012 used for the analysis.
The ranking table below puts the sector in a proper perspective, just as explained above.
About the Authors:
Taiwo OLOGBON-ORI is with The Analyst – the investment and equity research services operations of Proshare
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