September 8, 2022

Italian Post with poor reputation low share price despite good growth


Italian Post with poor reputation low share price despite good growth

In a conversation among investors in the garden of the Villa d'Este on Lake Como, shortly after anecdotes were exchanged about Bruce Springsteen's Champaign party among new friends in the hotel's floating pool, the conversation turned to Italy's postal service, Poste Italiane. The stock price had fallen, he said, while revenues had risen. A good reason to take a closer look. Indeed, the Obermatt ranks speak the same language.

PRO:The following three points speak for a buy:

  1. The Obermatt Growth Rank and the Value Rank are currently, on September 6, 2022, both high at the same time with 89 and 72 points, respectively. This is rare, as stocks that are cheap typically suffer from weak growth.
  2. The Rank Growth of 89 means that 89% of comparable companies are growing less overall than Poste Italiane. Specifically, sales growth and earnings growth are almost in the dark green with a rank of 72 and the overall Growth Rank would probably be better if not for the share price falling back, which is reflected in a Stock Return Rank of 32. Here, the market is not behaving very sensibly. Is it perhaps due to the too hot summer?
  3. The Value Ranks are all above average as well. The stock is 97% cheaper than the competition in terms of sales (rank of 97), 82% cheaper in terms of profit and 64% cheaper in terms of invested capital. Even the dividend yield is well above average with a rank of 58. What more could you want?

CONTRA: The following three points argue against it:

  1. Corporate debt is relatively high with a Safety Rank of 12. However, we are less concerned about this for a company that is close to the state. Large debts also mean a lot of upside potential if the company grows, and that is currently the case with the Italian Post.
  2. Italy has a bad reputation and the recent elections are not particularly conducive to confidence. But it's situations like this that are opportunities. At the same time, I know that a lot has changed in Italy. Proof of this are the numerous young companies on Lake Como, which didn't even exist ten years ago.
  3. Should you invest your money in Italy at all? Obermatt believes in diversification and is therefore a convinced advocate of the geographical distribution of investments.

The PRO points clearly prevail for Poste Italiane. Obermatt CEO Dr. Hermann J. Stern buys the stock for his portfolio. You should also take a closer look. Maybe you can find some more interesting details? Please let us know in the Obermatt Signal Chat.



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