Fact based stock research
Discovery (JSE:DSY)

ZAE000022331

How to read the free 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.

Discovery stock research in summary

discovery.co.zaportal

ANALYSIS: With an Obermatt Combined Rank of 88 (better than 88% compared with investment alternatives), Discovery (Life & Health Insurance, South Africa) shares have much better financial characteristics than comparable stocks. Shares of Discovery are low in value (priced high) with a consolidated Value Rank of 43 (worse than 57% of alternatives) and show below-average growth (Growth Rank of 5) but are safely financed (Safety Rank of 88), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 88, is a strong buy recommendation based on Discovery's financial characteristics. As the company Discovery's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 43) and low growth (Obermatt Growth Rank of 5), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 88) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. 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	43
Growth Rank	5
Safety Rank	88
Combined Rank	88

Country	South Africa
Industry	Life & Health Insurance
Index	JSE All Shares
Size class	X-Large

This stock has achievements: Top 10 Stock.

19-Sep-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: Discovery

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	10	51	49	43
GROWTH
GROWTH	30	49	27	5
SAFETY
SAFETY	92	88	88	88
SENTIMENT
SENTIMENT	n/a	41	58	^new
360° VIEW
360° VIEW	n/a	53	92	^new

Most recent update of the stock research: 19-Sep-2024. Financial reporting date used for calculating ranks: 31-Dec-2023. Stock research history is based on the Obermatt Method. The higher the rank, the better Discovery is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	10	51	49	43
GROWTH
GROWTH	30	49	27	5
SAFETY
SAFETY	92	88	88	88
COMBINED
COMBINED	58	88	88	88

Last update of combined financial performance: 6-Oct-2022. Stock analysis on combined financial performance: The higher the rank of Discovery the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 43 (worse than 57% compared with alternatives), Discovery shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Discovery. Price-to-Sales is 48 which means that the stock price compared with what market professionals expect for future profits is higher than 52% of comparable companies, indicating a low value concerning Discovery's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 45, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Discovery. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 46 and Dividend Yield, which is lower than 57% 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 43, is a hold recommendation based on Discovery's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Discovery? 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 Discovery? 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. Discovery 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)	48	65	39	48
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	21	41	53	46
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	20	49	60	45
DIVIDEND YIELD
DIVIDEND YIELD	1	35	42	43
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	10	51	49	43

Last update of Value Rank: 19-Sep-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Discovery; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 5 (better than 5% compared with alternatives), Discovery 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 all four metrics below average for Discovery. Sales Growth has a rank of 49, which means that currently professionals expect the company to grow less than 51% of its competitors. The same is valid for Profit Growth, with a rank of 6, and Capital Growth with 1. In addition, Stock Returns have a below market rank of 25, which means that the stock returns have recently been below 75% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 5, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. 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, especially since the growth performance is low here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	45	75	36	49
PROFIT GROWTH
PROFIT GROWTH	35	1	26	6
CAPITAL GROWTH
CAPITAL GROWTH	n/a	73	35	1
STOCK RETURNS
STOCK RETURNS	28	47	47	25
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	30	49	27	5

Last update of Growth Rank: 19-Sep-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Discovery.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 88 (better than 88% compared with alternatives) for 2022, the company Discovery has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Discovery 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 Discovery. Refinancing is at 77, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 77% 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 45, which means the company has an above-average debt-to-equity ratio. It has more debt than 55% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 88 (better than 88% compared with alternatives), Discovery has a financing structure that is significantly 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 Discovery 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 Discovery 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	79	42	42	45
REFINANCING
REFINANCING	77	77	77	77
LIQUIDITY
LIQUIDITY	87	66	66	65
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	92	88	88	88

Last update of Safety Rank: 6-Oct-2022. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Discovery 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	32	72	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	47	29	^new
MARKET PULSE
MARKET PULSE	n/a	50	61	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	41	58	^new

Last update of Sentiment Rank: 19-Sep-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Discovery.
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