October 26, 2023
Top 10 Stock Safaricom 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: Safaricom – Top 10 Stock in Good Governance in Growth Markets
Safaricom is listed as a top 10 stock on October 26, 2023 in the market index Good Governace Growth Markets 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, despite a currently slow growth momentum. Based on the Obermatt 360° View of 67 (high 67% performer), Obermatt assesses an overall buy recommendation for Safaricom on October 26, 2023.
Snapshot: Obermatt Ranks
| Country | Kenya |
| Industry | Wireless Telecommunication |
| Index | Good Governace Growth Markets |
| 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 Safaricom Buy
| 360 METRICS | October 26, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 74 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 62 |
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| SENTIMENT | ||||||||
| SENTIMENT | 76 |
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| 360° VIEW | ||||||||
| 360° VIEW | 67 |
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ANALYSIS: With an Obermatt 360° View of 67 (better than 67% compared with alternatives), overall professional sentiment and financial characteristics for the stock Safaricom are above average. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Safaricom. The consolidated Value Rank has an attractive rank of 74, which means that the share price of Safaricom is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 74% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 62. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 76. But the consolidated Growth Rank has a low rank of 31, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 69 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 67, Safaricom is better positioned than 67% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 74), secure financing practices (Safety Rank of 62), and positive market sentiment in the professional investor community (Sentiment Rank of 76). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 31), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Safaricom is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Safaricom very positive
ANALYSIS: With an Obermatt Sentiment Rank of 76 (better than 76% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Safaricom is very positive. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for Safaricom. Analyst Opinions are at a rank of 86 (better than 86% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 65, which means that currently, professional investors hold more stock in this company than in 65% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 60 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 60% of competitors). But Analyst Opinions Change has a below-average rank of 35, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in Safaricom. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 76 (more positive than 76% compared with investment alternatives), Safaricom has a reputation among professional investors that is significantly higher than that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...read more
Value Strategy: Safaricom Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 74 (better than 74% compared with alternatives), Safaricom shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Safaricom. Price-to-Sales (P/S) is 50, which means that the stock price compared with what market professionals expect for future sales is lower than for 50% of comparable companies, indicating a good value concerning Safaricom's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 82% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 96 (dividends are expected to be higher than 96% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 69% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for Safaricom to 31. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 74, is a buy recommendation based on Safaricom's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner in assets than its competitors. For instance, the company could be leasing its production facilities or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the three good value ranks for Sales, Profits, and Dividends are reliable indicators for the stock price value. ...read more
Growth Strategy: Safaricom Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 31 (better than 31% compared with alternatives), Safaricom shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Safaricom. Sales Growth has a rank of 73 which means that currently, professionals expect the company to grow more than 73% of its competitors. Capital Growth is also above 18% of competitors with a rank of 61. But Profit Growth only has a rank of 18, which means that currently professionals expect the company to grow its profits less than 82% of its competitors. And Stock Returns have also been below average with a rank of only 11. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 31, is a hold recommendation for growth and momentum investors. Profits are sometimes low if the company invests in the future. The positive revenue and capital investment outlook confirms such an interpretation. Both revenues and capital are solid growth indicators, and lower profits in such a case would be encouraging. But the investors see it differently by punishing the share price. Sometimes, Mister Market is not very reliable, because it is not uncommon for it to be volatile. Investors should look out for signs of growth expenditure that could justify low profit growth, and they may also find reasons why recent stock price developments don't confirm the growth outlook of operations. While operating growth indicators are not perfect, they are more reliable indicators for future performance than stock prices that can repeatedly surprise investors. ...read more
Safety Strategy: Safaricom Debt Financing Safety above-average
| SAFETY METRICS | October 26, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 71 |
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| REFINANCING | ||||||||
| REFINANCING | 28 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 78 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 62 |
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ANALYSIS: With an Obermatt Safety Rank of 62 (better than 62% compared with alternatives), the company Safaricom 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 Safaricom 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 Safaricom. Leverage is at a rank of 71, meaning the company has a below-average debt-to-equity ratio. It has less debt than 71% of its competitors. Liquidity is also good at a rank of 78, meaning the company generates more profit to service its debt than 78% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 28, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 72% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 62 (better than 62% compared with alternatives), Safaricom has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Safaricom. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Safaricom Above-Average Financial Performance
| COMBINED PERFORMANCE | October 26, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 74 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 78 |
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| COMBINED | ||||||||
| COMBINED | 57 |
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ANALYSIS: With an Obermatt Combined Rank of 57 (better than 57% compared with investment alternatives), Safaricom (Wireless Telecommunication, Kenya) shares have above-average financial characteristics compared with similar stocks. Shares of Safaricom are a good value (attractively priced) with a consolidated Value Rank of 74 (better than 74% of alternatives), are safely financed (Safety Rank of 62, which means low debt burdens), but show below-average growth (Growth Rank of 31). ...read more
RECOMMENDATION: A Combined Rank of 57, is a buy recommendation based on Safaricom's financial characteristics. As the company Safaricom's key financial metrics exhibit good value (Obermatt Value Rank of 74) but low growth (Obermatt Growth Rank of 31) while being safely financed (Obermatt Safety Rank of 62), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 74% of comparable companies, may also indicate that 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 and the downside is limited due to below-average financing risks. ...read more
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