December 19, 2024
Top 10 Stock South32 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: South32 – Top 10 Stock in Zinc Mining and Production
South32 is listed as a top 10 stock on December 19, 2024 in the market index Zinc because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low. Based on the Obermatt 360° View of 68 (high 68% performer), Obermatt assesses an overall buy recommendation for South32 on December 19, 2024.
Snapshot: Obermatt Ranks
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 South32 Buy
| 360 METRICS | December 19, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 57 |
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| GROWTH | ||||||||
| GROWTH | 67 |
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| SAFETY | ||||||||
| SAFETY | 29 |
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| SENTIMENT | ||||||||
| SENTIMENT | 74 |
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| 360° VIEW | ||||||||
| 360° VIEW | 68 |
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ANALYSIS: With an Obermatt 360° View of 68 (better than 68% compared with alternatives), overall professional sentiment and financial characteristics for the stock South32 are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for South32. The consolidated Value Rank has an attractive rank of 57, which means that the share price of South32 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 57% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 67, 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. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 74. But the company’s financing is risky with a Safety rank of 29. This means 71% of comparable companies have a safer financing structure than South32. ...read more
RECOMMENDATION: With a consolidated 360° View of 68, South32 is better positioned than 68% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 57), above-average growth (Growth Rank of 67), and positive market sentiment in the professional investor community (Sentiment Rank of 74), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 29), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of South32 is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for South32 positive
ANALYSIS: With an Obermatt Sentiment Rank of 74 (better than 74% compared with alternatives), overall professional sentiment and engagement for the stock South32 is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for South32. Analyst Opinions are at a rank of 43 (worse than 57% 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 91, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in South32. Even better, the Professional Investors rank is 62, meaning that professional investors hold more stock in this company than in 62% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 71, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 71% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 74 (more positive than 74% compared with investment alternatives), South32 has a reputation among professional investors that is above-average compared with that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: South32 Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 57 (better than 57% compared with alternatives), South32 shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, where three out of four indicators are above average for South32. Price-to-Sales (P/S) is 50 which means that the stock price compared with what market professionals expect for future sales is lower than for 50% of comparable companies, indicating a good value for South32's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 51. Finally, compared with other companies in the same industry, dividend yields of South32 are expected to be higher than for 69% of all competitors (a Dividend Yield rank of 69). The only low rank is for expected profits with a Price-to-Profit Rank of 39, indicating that the market expects the company's profit to be low despite a high dividend. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 57, is a buy recommendation based on South32's stock price compared with the company's operational size and dividend yields. The low Profit Rank could result from a one-off charge, for instance, for an accident, a legal settlement, or a restructuring project. If the company keeps its dividends high, the low expected profit may be transitory. If that is the case, the three good value ranks for Sales, Capital, and Dividends are reliable indicators for good stock price value, a low stock price. ...read more
Growth Strategy: South32 Growth Momentum good
| GROWTH METRICS | December 19, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 28 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 84 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 79 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 51 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 67 |
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ANALYSIS: With an Obermatt Growth Rank of 67 (better than 67% compared with alternatives), South32 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 all but one indicator above average for South32. Profit Growth has a rank of 84 which means that currently professionals expect the company to grow its profits more than 84% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 79, and Stock Returns has a rank of 51 which means that the stock returns have recently been above 51% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 28 (72% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 67, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: South32 Debt Financing Safety below-average
| SAFETY METRICS | December 19, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 56 |
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| REFINANCING | ||||||||
| REFINANCING | 53 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 25 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 29 |
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ANALYSIS: With an Obermatt Safety Rank of 29 (better than 29% compared with alternatives), the company South32 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 South32 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 where two out of three are above average for South32.Leverage is at 56, meaning the company has a below-average debt-to-equity ratio. It has less debt than 56% of its competitors.Refinancing is at a rank of 53, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 53% of its competitors. Liquidity is at 25, meaning that the company generates less profit to service its debt than 75% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 29 (worse than 71% compared with alternatives), South32 has a financing structure that is riskier than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. ...read more
Combined financial peformance: South32 Below-Average Financial Performance
| COMBINED PERFORMANCE | December 19, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 57 |
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| GROWTH | ||||||||
| GROWTH | 67 |
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| SAFETY | ||||||||
| SAFETY | 25 |
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| COMBINED | ||||||||
| COMBINED | 44 |
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ANALYSIS: With an Obermatt Combined Rank of 44 (worse than 56% compared with investment alternatives), South32 (Diversified Metals & Mining, Australia) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of South32 are a good value (attractively priced) with a consolidated Value Rank of 57 (better than 57% of alternatives), show above-average growth (Growth Rank of 67) but are riskily financed (Safety Rank of 29), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 44, is a hold recommendation based on South32's financial characteristics. As the company South32's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 57) and above-average growth (Obermatt Growth Rank of 67), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 29) 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. ...read more
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