November 21, 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 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 59 (high 59% performer), Obermatt assesses an overall buy recommendation for Santam on November 21, 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 | November 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 51 |
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| SAFETY | ||||||||
| SAFETY | 81 |
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| SENTIMENT | ||||||||
| SENTIMENT | 49 |
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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 of the metrics below and half above average for Santam. The consolidated Growth Rank has a good rank of 51, 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 51% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 81 which means that the company has a financing structure that is safer than 81% 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 49 which means that the share price of Santam 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 51% 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 59, Santam is better positioned than 59% 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 51), and the company is safely financed (Safety Rank of 81). However, professional market sentiment is low(Sentiment Rank of 49). The negative market view on Santam 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 Santam 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 Santam only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 49 (better than 49% compared with alternatives), overall professional sentiment and engagement for the stock Santam 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 Santam. Analyst Opinions are at a rank of 19 (worse than 81% 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 50, 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 Santam. More encouragingly, the Professional Investors rank is 80, which means that professional investors hold more stock in this company than in 80% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 48, 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 52% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 49 (less encouraging than 51% compared with investment alternatives), Santam has a reputation among professional investors that is below that of its competitors. The sentiment signals are mixed for Santam. 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: Santam Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 49 (worse than 51% compared with alternatives), Santam shares are more expensive than the average comparable stock. 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 79, which means that the stock price compared with what market professionals expect for future sales is lower than for 79% 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 61, which means that dividends are expected to be higher than for 61% 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 83% of alternatives (only 17% 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 49, is a hold 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 good
ANALYSIS: With an Obermatt Growth Rank of 51 (better than 51% compared with alternatives), Santam 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 Santam. Profit Growth has a rank of 83, which means that currently professionals expect the company to grow its profits more than 83% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 79 (above 79% of alternative investments). But Sales Growth has a below the median rank of 48, which means that, currently, professionals expect the company to grow less than 52% of its competitors, and Capital Growth also has a lower rank of 3. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 51, is a buy recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Santam. ...read more
Safety Strategy: Santam Debt Financing Safety very solid
| SAFETY METRICS | November 21, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 47 |
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| REFINANCING | ||||||||
| REFINANCING | 6 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 67 |
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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 67, meaning the company generates more profit to service its debt than 67% 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 47, which means that the company has an above-average debt-to-equity ratio. It has more debt than 53% 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 | November 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 51 |
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| SAFETY | ||||||||
| SAFETY | 67 |
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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 low in value (priced high) with a consolidated Value Rank of 49 (worse than 51% of alternatives). But they show above-average growth (Growth Rank of 51) and are safely financed (Safety Rank of 81, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 90, is a strong buy recommendation based on Santam's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Santam exhibits low value (Obermatt Value Rank of 49), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 51). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 81) 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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