Presco share price has declined about 34 percent in the last 2 years as investors bemoan the persistent decline in the company’s first quarter earnings per share which dipped for the third year in a row.
In Q1 2018, Presco recorded an EPS of N2.60k which represented a 33.33% decline from the N3.90k reported in 2017 Q1. Subsequently in Q1 2019, the company again posted a decline with EPS dropping to N2.14k before dipping to N1.80k in 2020 Q1.
Analysts attribute the poor EPS performance on declines in gross revenue, profit before tax and profit after tax over the last few years. Presco within the periods under review, saw an 18.44% decline in gross revenue with revenue dipping from N6.59 billion in 2018 Q1 to N5.37 billion in 2020 Q1.
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Analyst also believe that the decline seen in the company’s share price between the period under review from a high of N75.60k to N44.90k can be attributed to the consistent decline in profit before tax and profit after tax between 2018 Q1 and 2020 Q1 by 31.42% and 30.69% from N3.43 billion to N2.35 billion and N2.59 billion to N1.80 billion respectively.
The decline in profit before tax and profit after tax, can be said to have been caused by increased finance cost, between 2018 Q1 and 2020Q1. Presco saw its finance cost more than doubled moving from the N289.85 million recorded in 2018 Q1 to N499.23 million recorded in 2020 Q1 representing a 72.24% increase with an average cost of borrowing of 9.93%.
Meanwhile, persistency of the global health pandemic coronavirus which has seen economic activities slowdown in Nigeria cast a shadow on the hope that Presco will buck trend in the coming year and give its investors and shareholders more reasons to smile to the bank.
