Fact based stock research
Karooooo (NasdaqCM:KARO)

SGXZ19450089

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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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Karooooo stock research in summary

karooooo.com

ANALYSIS: With an Obermatt Combined Rank of 60 (better than 60% compared with investment alternatives), Karooooo (Application Software, Singapore) shares have above-average financial characteristics compared with similar stocks. Shares of Karooooo are a good value (attractively priced) with a consolidated Value Rank of 53 (better than 53% of alternatives), show above-average growth (Growth Rank of 61) but are riskily financed (Safety Rank of 48), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 60, is a buy recommendation based on Karooooo's financial characteristics. As the company Karooooo's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 53) and above-average growth (Obermatt Growth Rank of 61), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 48) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. 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	53
Growth Rank	61
Safety Rank	48
Combined Rank	60

Country	Singapore
Industry	Application Software
Index	NASDAQ
Size class	Small

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: Karooooo

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	n/a	57	56	53
GROWTH
GROWTH	n/a	67	63	61
SAFETY
SAFETY	n/a	17	57	48
SENTIMENT
SENTIMENT	n/a	100	98	^new
360° VIEW
360° VIEW	n/a	81	91	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 31-May-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Karooooo is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	n/a	57	56	53
GROWTH
GROWTH	n/a	67	63	61
SAFETY
SAFETY	n/a	17	57	48
COMBINED
COMBINED	n/a	44	80	60

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

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 53 (better than 53% compared with alternatives), Karooooo shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Karooooo. 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 Karooooo'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 23, which means that the stock price is lower as regards to invested capital than for 23% of comparable investments. On the other hand, Price-to-Sales is less favorable than 78% of alternatives (only 22% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 10% 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 53, is a buy recommendation based on Karooooo'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)	n/a	36	36	22
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	n/a	51	65	59
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	n/a	21	26	23
DIVIDEND YIELD
DIVIDEND YIELD	n/a	88	100	90
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	n/a	57	56	53

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

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 61 (better than 61% compared with alternatives), Karooooo shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Karooooo. Sales Growth has a rank of 56 which means that currently professionals expect the company to grow more than 56% of its competitors. Stock Returns are also above average with a rank of 79. But Capital Growth has only a rank of 45, which means that currently professionals expect the company to grow its invested capital less than 55% of its competitors. Profit Growth is also low, with a rank of only 41, which means that, currently, professionals expect the company to grow its profits below average. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 61, is a buy recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 79% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. 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, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	n/a	51	38	56
PROFIT GROWTH
PROFIT GROWTH	n/a	66	52	41
CAPITAL GROWTH
CAPITAL GROWTH	n/a	67	64	45
STOCK RETURNS
STOCK RETURNS	n/a	53	55	79
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	n/a	67	63	61

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

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 48 (better than 48% compared with alternatives), the company Karooooo has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Karooooo 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 two out of three indicators above average for Karooooo. Leverage is at a rank of 62, meaning the company has a below-average debt-to-equity ratio. It has less debt than 62% of its competitors. Liquidity is also good at a rank of 65, meaning the company generates more profit to service its debt than 65% 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 13, 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 87% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 48 (worse than 52% compared with alternatives), Karooooo has a financing structure that is riskier 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 Karooooo. 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. Investors may have a short-term debt challenge with Karooooo and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	n/a	7	78	62
REFINANCING
REFINANCING	n/a	22	18	13
LIQUIDITY
LIQUIDITY	n/a	63	73	65
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	n/a	17	57	48

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Karooooo 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	100	85	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	100	100	^new
MARKET PULSE
MARKET PULSE	n/a	83	93	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	100	98	^new

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