October 31, 2024
Top 10 Stock Telkom 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: Telkom – Top 10 Stock in SDG 4: Quality Education
Telkom is listed as a top 10 stock on October 31, 2024 in the market index SDG 4 because of its high performance in at least one of the Obermatt investment strategies. While only half of the consolidated Obermatt Ranks exhibit above-average performance, the professional market sentiment is positive and it may be a solid investment proposition, especially if a growth recovery is to be expected soon. Based on the Obermatt 360° View of 62 (high 62% performer), Obermatt assesses an overall buy recommendation for Telkom on October 31, 2024.
Snapshot: Obermatt Ranks
| Country | South Africa |
| Industry | Integrated Telecommunication |
| Index | Artificial Intelligence, Independent Boards Growth Markets, SDG 12, SDG 4, SDG 8, SDG 9, 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 Telkom Buy
| 360 METRICS | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 96 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 41 |
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| SENTIMENT | ||||||||
| SENTIMENT | 59 |
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| 360° VIEW | ||||||||
| 360° VIEW | 62 |
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ANALYSIS: With an Obermatt 360° View of 62 (better than 62% compared with alternatives), overall professional sentiment and financial characteristics for the stock Telkom are above average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Telkom. The consolidated Value Rank has an attractive rank of 96, which means that the share price of Telkom is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 96% of alternative stocks in the same industry. The consolidated Sentiment Rank has a good rank of 59, which means that professional investors are more optimistic about the stock than for 59% of alternative investment opportunities. But the consolidated Growth Rank has a low rank of 15, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. The consolidated Safety Rank has a riskier rank of 41, meaning the company has a riskier financing structure than 59 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 62, Telkom is better positioned than 62% of all alternative stock investment opportunities based on the Obermatt Method. Half of the consolidated Obermatt Ranks exhibit above-average performance, but the other half are below market levels. The company enjoys a good value (Value Rank of 96) and positive market sentiment in the professional investor community (Sentiment Rank of 59), but growth expectations are below-average (Growth Rank of 15) and the financing structure is on the risky side(Safety Rank of 41). This combination is rather dangerous, because high debt levels (low safety) require growth to finance the debt burden. The current low growth level may be temporary, because professionals are actually optimistic (positive sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. Companies with less growth typically have a lower price than fast-growing competitors. Even though professional investor sentiment is strong, we recommend further evaluating whether the future of Telkom is as challenging as the stock's low price suggests. Since the professional community is optimistic, the stock might just be going through a more challenging phase now, indicating that timing might be good now. ...read more
Sentiment Strategy: Professional Market Sentiment for Telkom positive
ANALYSIS: With an Obermatt Sentiment Rank of 59 (better than 59% compared with alternatives), overall professional sentiment and engagement for the stock Telkom is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Telkom. Analyst Opinions are at a rank of 39 (worse than 61% 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 79, 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 Telkom. More encouragingly, the Professional Investors rank is 56, which means that professional investors hold more stock in this company than in 56% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 34, 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 66% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 59 (more positive than 59% compared with investment alternatives), Telkom has a reputation among professional investors that is above-average compared with that of its competitors. The sentiment signals are mixed for Telkom. 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: Telkom Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 96 (better than 96% compared with alternatives) for 2024, Telkom shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Telkom. Price-to-Sales is 97 which means that the stock price compared with what market professionals expect for future sales is lower than for 97% of comparable companies, indicating a good value for Telkom's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 97% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 97. Compared with other companies in the same industry, dividend yields of Telkom are expected to be higher than for 50% of all competitors (a Dividend Yield rank of 50). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 96, is a buy recommendation based on Telkom's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Telkom based on its detailed value metrics.
Growth Strategy: Telkom Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 15 (better than 15% compared with alternatives), Telkom shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Telkom. Sales Growth has a below market rank of 17, which means that, currently, professionals expect the company to grow less than 83% of its competitors. The same is valid for Capital Growth, with a rank of 30, and Profit Growth, with a rank of 38. Currently, professionals expect the company to grow its profits less than 62% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 55, which means that the stock returns have recently been above 55% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 15, is a sell recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Telkom, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: Telkom Debt Financing Safety below-average
| SAFETY METRICS | October 31, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 60 |
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| REFINANCING | ||||||||
| REFINANCING | 35 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 30 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 41 |
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ANALYSIS: With an Obermatt Safety Rank of 41 (better than 41% compared with alternatives), the company Telkom 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 Telkom 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, with just one indicator above average for Telkom and the other two below average. Leverage is at a rank of 60 meaning the company has a below-average debt-to-equity ratio. It has less debt than 60% of its competitors.Refinancing is at a rank of 35, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 65% of its competitors. Liquidity is at a rank of 30, meaning that the company generates less profit to service its debt than 70% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 41 (worse than 59% compared with alternatives), Telkom has a financing structure that is riskier than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of Telkom are on the safer side. ...read more
Combined financial peformance: Telkom Above-Average Financial Performance
| COMBINED PERFORMANCE | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 96 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 30 |
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| COMBINED | ||||||||
| COMBINED | 56 |
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ANALYSIS: With an Obermatt Combined Rank of 56 (better than 56% compared with investment alternatives), Telkom (Integrated Telecommunication, South Africa) shares have above-average financial characteristics compared with similar stocks. Shares of Telkom are a good value (attractively priced) with a consolidated Value Rank of 96 (better than 96% of alternatives) but show below-average growth (Growth Rank of 15), and are riskily financed (Safety Rank of 41), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 56, is a buy recommendation based on Telkom's financial characteristics. As the company Telkom's key financial metrics exhibit good value (Obermatt Value Rank of 96) but low growth (Obermatt Growth Rank of 15) and risky financing practices (Obermatt Safety Rank of 41), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 96% of comparable companies, may indicate 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. ...read more
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