Prestige Assurance Revisited

I analyzed Prestige Assurance a few weeks ago and arrived at a conclusion that it was not one of the best buys in the market. I used the number of outstanding shares I found on the Nigerian Stock Exchange website where they did not update their data, obviously. I was able to get the correct number of shares in issue by this company from www.nigeriansecurities.com.

Prestige Assurance has 2,818,611,785 shares and not 915,304,226 as I thought. This automatically brings down their projected full year earning per share to 13K and their forward price earning ratio at the current price of N12.50 is 96x. Now, that makes Prestige Assurance one of the most expensive stocks in the market and if a market correction or a crash should occur, it is going to be one of the hardest hit.

I am a defensive investor, who loves a high safety margin and would rather steer clear of Prestige Assurance. That does not mean that it does not have the potential to create a wealth in the long run, but the drop in their gross margin from 2006 to 2007, as I highlighted in the previous post also need a good explanation, which we will have to wait for when they release their full year results.