April 11, 2024
Top 10 Stock Absa Sell Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Absa – Top 10 Stock in Johannesburg Securities Exchange All Shares Index JSE All Shares
Absa is listed as a top 10 stock on April 11, 2024 in the market index JSE All Shares because of its high performance in at least one of the Obermatt investment strategies. Only the Obermatt Value Rank exhibits above-average performance, which means that the stock is seen as critical by the professional community and other financial facts are below average, conveying mixed investment signals. Based on the Obermatt 360° View of 6 (6% performer), Obermatt issues an overall sell recommendation for Absa on April 11, 2024.
Snapshot: Obermatt Ranks
| Country | South Africa |
| Industry | Diversified Banks |
| Index | JSE All Shares |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Absa Sell
| 360 METRICS | April 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 93 |
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| GROWTH | ||||||||
| GROWTH | 7 |
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| SAFETY | ||||||||
| SAFETY | 8 |
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| SENTIMENT | ||||||||
| SENTIMENT | 11 |
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| 360° VIEW | ||||||||
| 360° VIEW | 6 |
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ANALYSIS: With an Obermatt 360° View of 6 (better than 6% compared with alternatives), overall professional sentiment and financial characteristics for the stock Absa are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Absa. Only the consolidated Value Rank has an attractive rank of 93, which means that the share price of Absa is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 93% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 7, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The consolidated Safety Rank has a riskier rank of 8, meaning the company has a riskier financing structure than 92% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, professionals are more pessimistic about the stock than for 89% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 11. ...read more
RECOMMENDATION: With a consolidated 360° View of 6, Absa is worse than 94% of all alternative stock investment opportunities based on the Obermatt Method. This means that Absa shares are on the riskier side for investors. Only one of the consolidated Obermatt Ranks exhibits above-average performance, namely the Value Rank at a level of 93. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 7), a riskier financing structure than the competition (Safety Rank of 8), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 11) is negative. This combination is sensitive to a crisis, because high debt levels (low safety) require growth to finance the debt burden. It’s no wonder that the investor community indicators are skeptical (low sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. We recommend evaluating whether the future of Absa is as challenging as the low price of the stock suggests. Since the professional community is pessimistic, you might need to worry about the future of Absa. Only invest if you have solid reasons to believe that the low growth is temporary and the current market sentiment is an overreaction, possibly due to reputational issues in the past. ...read more
Sentiment Strategy: Professional Market Sentiment for Absa negative
ANALYSIS: With an Obermatt Sentiment Rank of 11 (better than 11% compared with alternatives), overall professional sentiment and engagement for the stock Absa is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Absa. Analyst Opinions are at a rank of 89 (better than 89% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. This is a good sign, were it not for Analyst Opinions Change with a low rank of 5, which means that currently, stock research experts are changing their opinions for the worse. In other words, they are getting more critical of a stock investment in Absa. The Professional Investors rank is also low at 19, meaning that professional investors hold less stock in this company than in 81% of alternative investment opportunities. Pros tend to invest in other companies. Even worse, Market Pulse has a low rank of 4, which means that the current professional news and professional social networks are critical of this company (more negative news than for 96% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 11 (less encouraging than 89% compared with investment alternatives), Absa has a reputation among professional investors that is far below that of its competitors. There are several negative sentiment signals, with only the Analyst Opinions Rank above average. This could be a stock with a long reputation for being positive but where things are worsening. Most analysts may not see it yet, but some have, and the professionals are already quite pessimistic. Proceed with caution when investing in this stock. ...read more
Value Strategy: Absa Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 93 (better than 93% compared with alternatives) for 2024, Absa shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Absa. Price-to-Sales is 89 which means that the stock price compared with what market professionals expect for future sales is lower than for 89% of comparable companies, indicating a good value for Absa's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 88% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 82. Compared with other companies in the same industry, dividend yields of Absa are expected to be higher than for 98% of all competitors (a Dividend Yield rank of 98). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 93, is a buy recommendation based on Absa's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Absa based on its detailed value metrics.
Growth Strategy: Absa Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 7 (better than 7% compared with alternatives), Absa shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Absa. Sales Growth has a rank of 42, which means that currently professionals expect the company to grow less than 58% of its competitors. The same is valid for Profit Growth, with a rank of 37, and Capital Growth with 13. In addition, Stock Returns have a below market rank of 7, which means that the stock returns have recently been below 93% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 7, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Absa Debt Financing Safety risky
| SAFETY METRICS | April 11, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 24 |
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| REFINANCING | ||||||||
| REFINANCING | 35 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 25 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 8 |
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ANALYSIS: With an Obermatt Safety Rank of 8 (better than 8% compared with alternatives), the company Absa has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Absa is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with all three metrics below average for Absa. Liquidity is at 25, meaning that the company generates less profit to service its debt than 75% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 24, meaning the company has an above-average debt-to-equity ratio. It has more debt than 76% of its competitors. Finally, Refinancing is at a rank of 35 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 65% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 8 (worse than 92% compared with alternatives), Absa has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing.
Combined financial peformance: Absa Lowest Financial Performance
| COMBINED PERFORMANCE | April 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 93 |
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| GROWTH | ||||||||
| GROWTH | 7 |
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| SAFETY | ||||||||
| SAFETY | 25 |
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| COMBINED | ||||||||
| COMBINED | 12 |
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ANALYSIS: With an Obermatt Combined Rank of 12 (worse than 88% compared with investment alternatives), Absa (Diversified Banks, South Africa) shares have lower financial characteristics compared with similar stocks. Shares of Absa are a good value (attractively priced) with a consolidated Value Rank of 93 (better than 93% of alternatives) but show below-average growth (Growth Rank of 7), and are riskily financed (Safety Rank of 8), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 12, is a sell recommendation based on Absa's financial characteristics. As the company Absa's key financial metrics exhibit good value (Obermatt Value Rank of 93) but low growth (Obermatt Growth Rank of 7) and risky financing practices (Obermatt Safety Rank of 8), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 93% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. ...read more
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