Questor warns that unrest in key markets such as Nigeria and the tumbling value of some of the region’s currencies leaves the shares of PZ Cussons exposed and should be avoided on January 30 when the share price is expected to hit 373.2p.
The value of the Nigerian currency, the Naira, has collapsed to a record low against the dollar as the oil-dependent economy suffers from a falling oil price. There are also fears over an interruption to trading as the country heads towards elections next month and Islamic militants Boko Harem cause disruption in the north of the country.
The market is expecting pre-tax profits of about £46m in the first half and £110m for the full year ending May and revenue of £830m. Downgrades to those profit forecasts could follow after the half-year trading update this week.
An analysis in the UK Telegraph points to the positives of the company shares saying it is a stock to hold for the long-run.
“PZ Cussons is a quality company over the long term. The consumer products it sells provide steady revenue, even through a recession. The company has an excellent profit growth track record and has rewarded investors with a steadily rising dividend.”
Further the report, says, “the forecast 8.6p full-year dividend currently provides a yield of 2.4pc, growing at 8pc a year. That said, the shares trading on 19 times forecast earnings are looking far too expensive, given the problems in Nigeria and falling value of emerging market currencies. There is also a lack of liquidity – the founding family still owns a 35pc stake in the business. Questors said avoid the shares at 373.2p on January 30, 2013 and that advice remains.”
PZ Cussons is a FTSE 250-listed household goods company, which produces Imperial Leather and Cussons range of baby products.
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