Fact based stock research
Dis-Chem Pharmacies (JSE:DCP)

ZAE000227831

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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.

Dis-Chem Pharmacies stock research in summary

dischemgroup.com

ANALYSIS: With an Obermatt Combined Rank of 41 (worse than 59% compared with investment alternatives), Dis-Chem Pharmacies (Drug Retail, South Africa) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Dis-Chem Pharmacies are low in value (priced high) with a consolidated Value Rank of 17 (worse than 83% of alternatives). But they show above-average growth (Growth Rank of 69) and are safely financed (Safety Rank of 57, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 41, is a hold recommendation based on Dis-Chem Pharmacies's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Dis-Chem Pharmacies exhibits low value (Obermatt Value Rank of 17), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 69). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 57) 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). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	17
Growth Rank	69
Safety Rank	57
Combined Rank	41

Country	South Africa
Industry	Drug Retail
Index	JSE All Shares
Size class	Large

This stock has achievements: Top 10 Stock.

18-Apr-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Dis-Chem Pharmacies

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	26	23	23	17
GROWTH
GROWTH	78	53	57	69
SAFETY
SAFETY	50	38	56	57
SENTIMENT
SENTIMENT	n/a	43	27	^new
360° VIEW
360° VIEW	n/a	29	28	^new

Most recent update of the stock research: 18-Apr-2024. Financial reporting date used for calculating ranks: 30-Sep-2023. Stock research history is based on the Obermatt Method. The higher the rank, the better Dis-Chem Pharmacies is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	26	23	23	17
GROWTH
GROWTH	78	53	57	69
SAFETY
SAFETY	50	38	56	57
COMBINED
COMBINED	45	21	36	41

Last update of combined financial performance: 18-Apr-2024. Stock analysis on combined financial performance: The higher the rank of Dis-Chem Pharmacies the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 17 (worse than 83% compared with alternatives), Dis-Chem Pharmacies shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Dis-Chem Pharmacies. Price-to-Sales is 43 which means that the stock price compared with what market professionals expect for future profits is higher than 57% of comparable companies, indicating a low value concerning Dis-Chem Pharmacies's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 11, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Dis-Chem Pharmacies. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 26 and Dividend Yield, which is lower than 66% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 17, is a sell recommendation based on Dis-Chem Pharmacies's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Dis-Chem Pharmacies? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Dis-Chem Pharmacies? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Dis-Chem Pharmacies may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	61	43	50	43
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	19	33	31	26
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	10	13	18	11
DIVIDEND YIELD
DIVIDEND YIELD	62	33	39	34
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	26	23	23	17

Last update of Value Rank: 18-Apr-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Dis-Chem Pharmacies; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 69 (better than 69% compared with alternatives), Dis-Chem Pharmacies 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 Dis-Chem Pharmacies. Sales Growth has a rank of 86 which means that currently, professionals expect the company to grow more than 86% of its competitors. Capital Growth is also above 18% of competitors with a rank of 64, and Stock Returns with the rank of 79 is also an outperformance. Only Profit Growth is low with a rank of 18 which means that currently, professionals expect the company to grow its profits less than 82% of its competitors. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 69, is a buy recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, Dis-Chem Pharmacies is a good growth stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	50	56	70	86
PROFIT GROWTH
PROFIT GROWTH	n/a	50	44	18
CAPITAL GROWTH
CAPITAL GROWTH	n/a	17	41	64
STOCK RETURNS
STOCK RETURNS	92	85	55	79
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	78	53	57	69

Last update of Growth Rank: 18-Apr-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Dis-Chem Pharmacies.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 57 (better than 57% compared with alternatives), the company Dis-Chem Pharmacies has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Dis-Chem Pharmacies 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 two out of three indicators above-average for Dis-Chem Pharmacies. Refinancing is at 54, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 54% of its competitors. Liquidity is also good at 65, meaning the company generates more profit to service its debt than 65% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 35, which means the company has an above-average debt-to-equity ratio. It has more debt than 65% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 57 (better than 57% compared with alternatives), Dis-Chem Pharmacies has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Dis-Chem Pharmacies could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. In the long-term, investors may have a debt challenge with Dis-Chem Pharmacies and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	36	28	36	35
REFINANCING
REFINANCING	64	51	53	54
LIQUIDITY
LIQUIDITY	47	47	60	65
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	50	38	56	57

Last update of Safety Rank: 18-Apr-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Dis-Chem Pharmacies and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	17	54	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	29	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	65	31	^new
MARKET PULSE
MARKET PULSE	n/a	52	40	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	43	27	^new

Last update of Sentiment Rank: 18-Apr-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Dis-Chem Pharmacies.
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