April 11, 2024
Top 10 Stock Santam 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: Santam – Top 10 Stock in Johannesburg Securities Exchange All Shares Index JSE All Shares
Santam 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. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° View of 59 (high 59% performer), Obermatt assesses an overall buy recommendation for Santam on April 11, 2024.
Snapshot: Obermatt Ranks
| Country | South Africa |
| Industry | Property & Casualty Insurance |
| Index | Good Governace 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 Santam Buy
| 360 METRICS | April 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 55 |
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| GROWTH | ||||||||
| GROWTH | 30 |
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| SAFETY | ||||||||
| SAFETY | 81 |
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| SENTIMENT | ||||||||
| SENTIMENT | 6 |
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| 360° VIEW | ||||||||
| 360° VIEW | 59 |
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ANALYSIS: With an Obermatt 360° View of 59 (better than 59% compared with alternatives), overall professional sentiment and financial characteristics for the stock Santam are above average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Santam. The consolidated Value Rank has an attractive rank of 55, which means that the share price of Santam is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 55% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 81. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 6. Professional investors are more confident in 94% other stocks. The consolidated Growth Rank also has a low rank of 30, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 70 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 59, Santam is better positioned than 59% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 55), and the financing structure is on the safer side (Safety Rank of 81). However, sentiment in the professional investor community is below-average (Sentiment Rank of 6), as is the growth momentum for the company (Growth Rank of 30). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for Santam negative
ANALYSIS: With an Obermatt Sentiment Rank of 6 (better than 6% compared with alternatives), overall professional sentiment and engagement for the stock Santam is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Santam. Analyst Opinions are at a rank of 34 (worse than 66% 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 8 which means that stock research experts are getting even more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 31, 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 69% of competitors). No wonder, the Professional Investors rank is only 18, which means that professional investors hold less stock in this company than in 82% of alternative investment opportunities. Pros tend to stay away from Santam, which may be due to a small company size but just as likely because of its relatively low Sentiment Rank. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 6 (less encouraging than 94% compared with investment alternatives), Santam has a reputation among professional investors that is far below that of its competitors. Investors should be careful with this stock right now. Further research is required if an investment is desired, because the facts found in the professional community are all negative. ...read more
Value Strategy: Santam Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 55 (better than 55% compared with alternatives), Santam shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Santam. Price-to-Sales (P/S) is 87, which means that the stock price compared with what market professionals expect for future sales is lower than for 87% of comparable companies, indicating a good value concerning Santam's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 70, which means that dividends are expected to be higher than for 70% 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 75% of alternatives (only 25% 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 62% 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 55, is a buy recommendation based on Santam'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: Santam Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 30 (better than 30% compared with alternatives), Santam shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four metrics below average for Santam. While Profit Growth has a good rank of 54, as professionals currently expect the company to grow its profits more than 54% of its competitors, all other growth indicators are below market averages. Sales Growth has a rank of 45, which means that currently professionals expect the company to grow less than 55% of its competitors, while Capital Growth has a rank of 9 and Stock Returns have been below market median, with a rank of 41 (59% of alternative investments were better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 30, is a hold recommendation for growth and momentum investors. While revenue growth and capital growth are good growth momentum indicators, profit is less reliable, because profits may increase due to cost-cutting measures which typically indicate negative growth momentum. "You can save a dollar only once" is the saying about such situations. Growth Investors should look at company priorities closely if they are interested in growth, because the increase in profits is not usually an indicator of growth, and stock prices have been below market, too. ...read more
Safety Strategy: Santam Debt Financing Safety very solid
| SAFETY METRICS | April 11, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 45 |
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| REFINANCING | ||||||||
| REFINANCING | 6 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 68 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 81 |
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ANALYSIS: With an Obermatt Safety Rank of 81 (better than 81% compared with alternatives) for 2022, the company Santam has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Santam 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 just one indicator above average for Santam. Liquidity is at 68, meaning the company generates more profit to service its debt than 68% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 6, 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 94% of its competitors. Leverage is also high at a rank of 45, which means that the company has an above-average debt-to-equity ratio. It has more debt than 55% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 81 (better than 81% compared with alternatives), Santam has a financing structure that is significantly safer than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Santam Top Financial Performance
| COMBINED PERFORMANCE | April 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 55 |
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| GROWTH | ||||||||
| GROWTH | 30 |
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| SAFETY | ||||||||
| SAFETY | 68 |
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| COMBINED | ||||||||
| COMBINED | 90 |
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ANALYSIS: With an Obermatt Combined Rank of 90 (better than 90% compared with investment alternatives), Santam (Property & Casualty Insurance, South Africa) shares have much better financial characteristics than comparable stocks. Shares of Santam are a good value (attractively priced) with a consolidated Value Rank of 55 (better than 55% of alternatives), are safely financed (Safety Rank of 81, which means low debt burdens), but show below-average growth (Growth Rank of 30). ...read more
RECOMMENDATION: A Combined Rank of 90, is a strong buy recommendation based on Santam's financial characteristics. As the company Santam's key financial metrics exhibit good value (Obermatt Value Rank of 55) but low growth (Obermatt Growth Rank of 30) while being safely financed (Obermatt Safety Rank of 81), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 55% of comparable companies, may also indicate that 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 and the downside is limited due to below-average financing risks. ...read more
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