Investor Relations: Is FCMB Fair Value Greater Than Fidelity Bank’s, If yes, why?

Investor Relations: Is FCMB Fair Value Greater Than Fidelity Bank’s, If yes, why?

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Post Views: 333 Dear Ambrose, Is the fair value of FCMB greater than that of FIDELITY BANK if yes what’s the reason sir? Thanks so much I am grateful....

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Dear Ambrose, Is the fair value of FCMB greater than that of FIDELITY BANK if yes what’s the reason sir?
Thanks so much I am grateful.
Ifeanyi Ericson

Answer
In arriving at the fair value of any company, a combination of many factors is used and different models considered.
The fair value of FCMB is not greater than that of Fidelity Bank, judging by the third quarter earnings power of both banks.
The Q3 fair value of Fidelity Bank is N4.82 per share, which is more than that of FCMB at N4 in the same period under review.
It is also important to note that the consistent dividend payout of Fidelity Bank has impacted positively on the computation model used in valuing both financial institutions.
That notwithstanding, shares of both banks remain attractive considering the fact that their earnings are trending up to support their prices.
Price-to-Earnings ratio of FCMB as at Q3 stood at 3.77x and dividend yield, 4.65%; while Fidelity Bank’s stood at 3.87x and yield, 4.58%.
The payout ratios of the two banks are low compared to their earnings power.
For the earnings positions of both banks’ on quarterly basis, see our earnings tracking table.

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