January 30, 2025
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 Australian Securities Exchange Index ASX 50
South32 is listed as a top 10 stock on January 30, 2025 in the market index ASX 50 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 73 (high 73% performer), Obermatt assesses an overall buy recommendation for South32 on January 30, 2025.
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 | January 30, 2025 | |||||||
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| VALUE | ||||||||
| VALUE | 69 |
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| GROWTH | ||||||||
| GROWTH | 87 |
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| SAFETY | ||||||||
| SAFETY | 31 |
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| SENTIMENT | ||||||||
| SENTIMENT | 64 |
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| 360° VIEW | ||||||||
| 360° VIEW | 73 |
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ANALYSIS: With an Obermatt 360° View of 73 (better than 73% 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 69, 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 69% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 87, 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 64. But the company’s financing is risky with a Safety rank of 31. This means 69% of comparable companies have a safer financing structure than South32. ...read more
RECOMMENDATION: With a consolidated 360° View of 73, South32 is better positioned than 73% 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 69), above-average growth (Growth Rank of 87), and positive market sentiment in the professional investor community (Sentiment Rank of 64), 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 31), 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 64 (better than 64% 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 45 (worse than 55% 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 71, 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 56, meaning that professional investors hold more stock in this company than in 56% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 75, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 75% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 64 (more positive than 64% 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 69 (better than 69% 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, with half of the indicators below and half above average for South32. Expected dividend yields are higher than for 84% of comparable companies (a Dividend Yield rank of 84), making the stock attractive. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 51, which means that the stock price is lower compared with invested capital than for 51% of comparable investments. But in respect to sales and profits, the picture is reversed. Price-to-Sales is 47 which means that the stock price compared with what market professionals expect for future profits is higher than for 53% of comparable companies, indicating a low value concerning South32's sales levels. The Price-to-Profit ratio (also referred to as price-earnings (P/E) ratio) is also unfavorable for South32 with a rank of 43. This means that the stock price, compared with what market professionals expect for future profits, is higher than for 57% of comparable companies, indicating a low value concerning South32's profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 69, is a buy recommendation based on South32's stock price compared with the company's operational size and dividend yields. The company seems confident that it can generate a reasonable return on invested capital, because it pays an above-average dividend while profits are below what you would expect for a company with this stock price. If you agree with this practice and believe that profits will return to higher levels, as the current dividend policy suggests, South32 may be an attractive investment. If this is not the case, you may want to be careful with this stock as it is also expensive compared with its expected revenue levels. ...read more
Growth Strategy: South32 Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 87 (better than 87% compared with alternatives) for 2025, South32 shows one of the highest growth dynamics in its industry. Investors also speak of high 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 86 which means that currently professionals expect the company to grow its profits more than 86% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 88, and Stock Returns has a rank of 55 which means that the stock returns have recently been above 55% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 46 (54% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 87, 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 | January 30, 2025 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 56 |
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| REFINANCING | ||||||||
| REFINANCING | 55 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 25 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 31 |
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ANALYSIS: With an Obermatt Safety Rank of 31 (better than 31% 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 55, 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 55% 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 31 (worse than 69% 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 Above-Average Financial Performance
| COMBINED PERFORMANCE | January 30, 2025 | |||||||
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| VALUE | ||||||||
| VALUE | 69 |
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| GROWTH | ||||||||
| GROWTH | 87 |
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| SAFETY | ||||||||
| SAFETY | 25 |
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| COMBINED | ||||||||
| COMBINED | 67 |
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ANALYSIS: With an Obermatt Combined Rank of 67 (better than 67% compared with investment alternatives), South32 (Diversified Metals & Mining, Australia) shares have above-average financial characteristics compared with similar stocks. Shares of South32 are a good value (attractively priced) with a consolidated Value Rank of 69 (better than 69% of alternatives), show above-average growth (Growth Rank of 87) but are riskily financed (Safety Rank of 31), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 67, is a buy 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 69) and above-average growth (Obermatt Growth Rank of 87), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 31) 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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