April 11, 2024
Top 10 Stock Rand Merchant 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: Rand Merchant – Top 10 Stock in Johannesburg Securities Exchange All Shares Index JSE All Shares
Rand Merchant 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. 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 72 (high 72% performer), Obermatt assesses an overall buy recommendation for Rand Merchant on April 11, 2024.
Snapshot: Obermatt Ranks
| Country | South Africa |
| Industry | Life & Health Insurance |
| Index | Independent Boards Growth Markets, JSE All Shares |
| Size class | 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 Rand Merchant Buy
| 360 METRICS | April 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 22 |
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| GROWTH | ||||||||
| GROWTH | 58 |
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| SAFETY | ||||||||
| SAFETY | 98 |
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| SENTIMENT | ||||||||
| SENTIMENT | 34 |
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| 360° VIEW | ||||||||
| 360° VIEW | 72 |
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ANALYSIS: With an Obermatt 360° View of 72 (better than 72% compared with alternatives), overall professional sentiment and financial characteristics for the stock Rand Merchant are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Rand Merchant. The consolidated Growth Rank has a good rank of 58, 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 58% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 98 which means that the company has a financing structure that is safer than 98% 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 22 which means that the share price of Rand Merchant 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 78% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 34, which means that professional investors are more pessimistic about the stock than for 66% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 72, Rand Merchant is better positioned than 72% 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 58), and the company is safely financed (Safety Rank of 98). However, professional market sentiment is low(Sentiment Rank of 34). The negative market view on Rand Merchant 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 Rand Merchant 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 Rand Merchant only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 34 (better than 34% compared with alternatives), overall professional sentiment and engagement for the stock Rand Merchant is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and half above average for Rand Merchant. Analyst Opinions are at a rank of 25 (worse than 75% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 18, which means that stock research experts are getting even more pessimistic. In addition, the Professional Investors rank is 49, which means that professional investors hold less stock in this company than in 51% of alternative investment opportunities. Pros tend to invest in other companies. The only positive sentiment indicator for Rand Merchant is Market Pulse, with a rank of 75, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 75% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 34 (less encouraging than 66% compared with investment alternatives), Rand Merchant has a reputation among professional investors that is below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Rand Merchant Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 22 (worse than 78% compared with alternatives), Rand Merchant shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Rand Merchant. Price-to-Sales (P/S) is 57, which means that the stock price compared with what market professionals expect for future sales is lower than for 57% of comparable companies, indicating a good value concerning Rand Merchant's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 53, which means that dividends are expected to be higher than for 53% of comparable investments. On the other hand, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is less favorable than for 88% of alternatives (only 12% of peers have an even higher ratio). The same is valid for the Price-to-Profit (or Price / Earnings, P/E) ratio, which is higher than for 82% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 22, is a sell recommendation based on Rand Merchant's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. ...read more
Growth Strategy: Rand Merchant Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 58 (better than 58% compared with alternatives), Rand Merchant 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 Rand Merchant. Sales Growth has a rank of 53 which means that currently professionals expect the company to grow more than 53% of its competitors. Stock Returns are also above average with a rank of 53. But Capital Growth has only a rank of 35, which means that currently professionals expect the company to grow its invested capital less than 65% of its competitors. Profit Growth is also low, with a rank of only 46, 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 58, 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 53% 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. ...read more
Safety Strategy: Rand Merchant Debt Financing Safety very solid
| SAFETY METRICS | April 11, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 93 |
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| REFINANCING | ||||||||
| REFINANCING | 65 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 98 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 98 |
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ANALYSIS: With an Obermatt Safety Rank of 98 (better than 98% compared with alternatives) for 2022, the company Rand Merchant has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Rand Merchant 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, where all three are above average for Rand Merchant. Leverage is at 93, meaning the company has a below-average debt-to-equity ratio. It has less debt than 93% of its competitors. Refinancing is at a rank of 65, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 65% of its competitors. Finally, Liquidity is also good at a rank of 98, which means that the company generates more profit to service its debt than 98% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 98 (better than 98% compared with alternatives), Rand Merchant has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Rand Merchant Top Financial Performance
| COMBINED PERFORMANCE | April 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 22 |
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| GROWTH | ||||||||
| GROWTH | 58 |
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| SAFETY | ||||||||
| SAFETY | 98 |
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| COMBINED | ||||||||
| COMBINED | 85 |
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ANALYSIS: With an Obermatt Combined Rank of 85 (better than 85% compared with investment alternatives), Rand Merchant (Life & Health Insurance, South Africa) shares have much better financial characteristics than comparable stocks. Shares of Rand Merchant are low in value (priced high) with a consolidated Value Rank of 22 (worse than 78% of alternatives). But they show above-average growth (Growth Rank of 58) and are safely financed (Safety Rank of 98, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 85, is a strong buy recommendation based on Rand Merchant's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Rand Merchant exhibits low value (Obermatt Value Rank of 22), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 58). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 98) 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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