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DANGSUGAR: Hold For Long Term, 5Yrs Return Is At 195.30%
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DANGSUGAR: Hold For Long Term, 5Yrs Return Is At 195.30%

[Image: DANSUGAR_930X620.png]

A review of historic price performance over time gives an opportunity to see what return rates one can expect over time when investing in the stocks. with this opinion analysis article, we bring to light, The five years return of DANGOTE SUGAR PLC

Dangote Sugar Plc closed the year 2020 at N17.60- posting full-year returns of 29.41% - After discounting the current inflation rate of 14.89% and transaction cost (buy &sell cost) of about 4.5%, this gives shareholders a real capital appreciation of 10.45%. This means if you had invested N100,000 into DANGSUGAR since Dec 31, 2019, your absolute real gain by now is N10,450. Please note that the dividend income of N6,250 at a rate of 6.25% yield not included). 

This further shows that Investing in the shares of Dangote Sugar has been very profitable to loyal shareholders that kept faith with the company in the last one year as the Investors fund are better-off with 16.70% real returns, which we consider a fantastic return when compared with 8.75%(inflation not discounted) average stock returns in the year 2020.

Meanwhile, the average stock gains in the consumer goods sub-sector stood at -1.19%, which makes the real returns of 16.70% posted by DANGSUGAR an impressive one for the year. Though, peer analysis reveals that the real return posted by VITAFOAM (58.31%) is much better than what Dangote Sugar posted in the year 2020 but DANGSUGAR had outperformed significantly with five years return of 195.30%.

Can Dangsugar Sustain This Profitable Trend In 2021?

The five-year price trend analysis reveals that DANGSUGAR had maintained a strong uptrend posture, posting 195.30% price appreciation to move from N5.96 to N17.60 within the 5yrs period. This has put the 5Years Average gain at 39.06% while the average real return over the last five years, after discounting inflation has been around 25%. Going by the price-performance history in the last five years, we have no doubt about the growth trajectory of the firm.

To buttress this further, the improved profit margin of 26.23% and improved PE ratio of 6.24 further strengthened our cautious optimism towards the expected growth of earnings of the firm. The overall market sentiments have revealed that investors are optimistic and willing to pay more for the shares of DANGOTE SUGAR as indicated by an improved Price-To-Earnings ratio. In addition to this, the price-to-sales ratio of 1.3 further suggests that the stock's valuation remains attractive to long term investors.

However, we are not comfortable with the firm's ROE of 20% as we consider this too low for a stock trading with a price-to-earnings of 6.24. Nevertheless, we are optimistic that the firm has the potential to deliver better ROE in the near term.

In our opinion, the NAPS of N22.26 further strengthens our optimistic position that the stock has strong uptrend potential while we advise a HOLD position for a long term investment objective.

Disclaimer:

Past performance is not a guarantee of future return, nor is it necessarily indicative of future performance. keep in mind investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Please note that stockmanNigeria.com is not in any way or any form compensated for investment advice published on this platform.
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