Fact based stock research
East African Breweries (NASE:EABL)

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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.

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(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

East African Breweries stock research in summary

eabl.com

ANALYSIS: With an Obermatt Combined Rank of 32 (worse than 68% compared with investment alternatives), East African Breweries (Brewers, Kenya) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of East African Breweries are low in value (priced high) with a consolidated Value Rank of 33 (worse than 67% of alternatives), and are riskily financed (Safety Rank of 10, which means above-average debt burdens) but show above-average growth (Growth Rank of 83). ...read more

RECOMMENDATION: A Combined Rank of 32, is a hold recommendation based on East African Breweries's financial characteristics. As the company East African Breweries shows low value with an Obermatt Value Rank of 33 (67% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 83% of comparable companies (Obermatt Growth Rank is 83). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 10 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for East African Breweries, even a low-value company (in terms of its key financial indicators) can be a good investment. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	33
Growth Rank	83
Safety Rank	10
Combined Rank	32

Country	Kenya
Industry	Brewers
Index
Size class	Large

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: East African Breweries

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	38	59	82	33
GROWTH
GROWTH	90	77	41	83
SAFETY
SAFETY	1	1	3	10
SENTIMENT
SENTIMENT	n/a	45	26	^new
360° VIEW
360° VIEW	n/a	27	18	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better East African Breweries is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	38	59	82	33
GROWTH
GROWTH	90	77	41	83
SAFETY
SAFETY	1	1	3	10
COMBINED
COMBINED	10	41	24	32

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of East African Breweries the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 33 (worse than 67% compared with alternatives), East African Breweries shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for East African Breweries. Price-to-Profit (also referred to as price-earnings, P/E) is 59 which means that the stock price compared with what market professionals expect for future profits is lower than for 59% of comparable companies, indicating a good value concerning East African Breweries's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 18, which means that the stock price is lower as regards to invested capital than for 18% of comparable investments. On the other hand, Price-to-Sales is less favorable than 69% of alternatives (only 31% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 43% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 33, is a hold recommendation based on East African Breweries's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	79	31	53	31
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	68	69	81	59
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	6	40	65	18
DIVIDEND YIELD
DIVIDEND YIELD	1	87	88	57
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	38	59	82	33

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of East African Breweries; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 83 (better than 83% compared with alternatives) for 2024, East African Breweries 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 but one indicator above average for East African Breweries. Sales Growth has a rank of 51 which means that currently, professionals expect the company to grow more than 51% of its competitors. Capital Growth is also above 35% of competitors with a rank of 79, and Stock Returns with the rank of 97 is also an outperformance. Only Profit Growth is low with a rank of 35 which means that currently, professionals expect the company to grow its profits less than 65% of its competitors. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 83, is a buy recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, East African Breweries is a good growth stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	90	57	72	51
PROFIT GROWTH
PROFIT GROWTH	n/a	100	39	35
CAPITAL GROWTH
CAPITAL GROWTH	n/a	28	67	79
STOCK RETURNS
STOCK RETURNS	58	61	7	97
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	90	77	41	83

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of East African Breweries.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 10 (better than 10% compared with alternatives), the company East African Breweries 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 East African Breweries 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 East African Breweries. Liquidity is at 27, meaning that the company generates less profit to service its debt than 73% 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 14, meaning the company has an above-average debt-to-equity ratio. It has more debt than 86% of its competitors. Finally, Refinancing is at a rank of 27 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 73% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 10 (worse than 90% compared with alternatives), East African Breweries 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. Investors should look at Obermatt’s Value, Growth, and Sentiment Ranks to confirm a very positive outlook or be careful with investing in stocks of East African Breweries because it may suffer significantly in case of future difficulties. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	18	4	6	14
REFINANCING
REFINANCING	20	1	5	27
LIQUIDITY
LIQUIDITY	43	22	29	27
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	1	1	3	10

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of East African Breweries and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	52	44	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	23	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	89	47	^new
MARKET PULSE
MARKET PULSE	n/a	27	7	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	45	26	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for East African Breweries.
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