November 21, 2024
Top 10 Stock Capitec Bank Strong Buy 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: Capitec Bank – Top 10 Stock in Johannesburg Securities Exchange All Shares Index JSE All Shares
Capitec Bank is listed as a top 10 stock on November 21, 2024 in the market index JSE All Shares because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 79 (top 79% performer), Obermatt assesses an overall strong buy recommendation for Capitec Bank on November 21, 2024.
Snapshot: Obermatt Ranks
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 Capitec Bank Strong Buy
| 360 METRICS | November 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 5 |
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| GROWTH | ||||||||
| GROWTH | 99 |
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| SAFETY | ||||||||
| SAFETY | 77 |
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| SENTIMENT | ||||||||
| SENTIMENT | 49 |
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| 360° VIEW | ||||||||
| 360° VIEW | 79 |
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ANALYSIS: With an Obermatt 360° View of 79 (better than 79% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Capitec Bank are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Capitec Bank. The consolidated Growth Rank has a good rank of 99, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 99% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 77 which means that the company has a financing structure that is safer than 77% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 5 which means that the share price of Capitec Bank is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 95% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 49, which means that professional investors are more pessimistic about the stock than for 51% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 79, Capitec Bank is better positioned than 79% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 99), and the company is safely financed (Safety Rank of 77). However, professional market sentiment is low(Sentiment Rank of 49). The negative market view on Capitec Bank may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Capitec Bank compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Capitec Bank only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 49 (better than 49% compared with alternatives), overall professional sentiment and engagement for the stock Capitec Bank is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Capitec Bank. Analyst Opinions are at a rank of 28 (worse than 72% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 70, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Capitec Bank. More encouragingly, the Professional Investors rank is 75, which means that professional investors hold more stock in this company than in 75% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 28, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 72% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 49 (less encouraging than 51% compared with investment alternatives), Capitec Bank has a reputation among professional investors that is below that of its competitors. The sentiment signals are mixed for Capitec Bank. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: Capitec Bank Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 5 (worse than 95% compared with alternatives), Capitec Bank shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Capitec Bank. Price-to-Sales is 12 which means that the stock price compared with what market professionals expect for future profits is higher than 88% of comparable companies, indicating a low value concerning Capitec Bank's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 1, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Capitec Bank. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 3 and Dividend Yield, which is lower than 70% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 5, is a sell recommendation based on Capitec Bank's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Capitec Bank? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Capitec Bank? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Capitec Bank may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Capitec Bank Growth Momentum high
| GROWTH METRICS | November 21, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 74 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 87 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 59 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 99 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 99 |
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ANALYSIS: With an Obermatt Growth Rank of 99 (better than 99% compared with alternatives) for 2024, Capitec Bank shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for Capitec Bank. Sales Growth has a value of 74, which means that, currently, professionals expect the company to grow more than 74% of its competitors. The same is valid for Profit Growth with a value of 87 and for Capital Growth with 59. In addition, Stock Returns had an above-average rank value of 99, which means they have been higher than 99% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 99, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Capitec Bank exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Capitec Bank Debt Financing Safety very solid
| SAFETY METRICS | November 21, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 74 |
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| REFINANCING | ||||||||
| REFINANCING | 10 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 98 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 77 |
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ANALYSIS: With an Obermatt Safety Rank of 77 (better than 77% compared with alternatives) for 2024, the company Capitec Bank has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Capitec Bank is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Capitec Bank. Leverage is at a rank of 74, meaning the company has a below-average debt-to-equity ratio. It has less debt than 74% of its competitors. Liquidity is also good at a rank of 98, meaning the company generates more profit to service its debt than 98% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 10, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 90% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 77 (better than 77% compared with alternatives), Capitec Bank has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Capitec Bank. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Capitec Bank Top Financial Performance
| COMBINED PERFORMANCE | November 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 5 |
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| GROWTH | ||||||||
| GROWTH | 99 |
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| SAFETY | ||||||||
| SAFETY | 98 |
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| COMBINED | ||||||||
| COMBINED | 75 |
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ANALYSIS: With an Obermatt Combined Rank of 75 (better than 75% compared with investment alternatives), Capitec Bank (Diversified Banks, South Africa) shares have much better financial characteristics than comparable stocks. Shares of Capitec Bank are low in value (priced high) with a consolidated Value Rank of 5 (worse than 95% of alternatives). But they show above-average growth (Growth Rank of 99) and are safely financed (Safety Rank of 77, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 75, is a strong buy recommendation based on Capitec Bank's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Capitec Bank exhibits low value (Obermatt Value Rank of 5), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 99). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 77) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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