August 31, 2023
Top 10 Stock Sappi 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: Sappi – Top 10 Stock in Johannesburg Securities Exchange All Shares Index JSE All Shares
Sappi is listed as a top 10 stock on August 31, 2023 in the market index JSE All Shares because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° View of 67 (high 67% performer), Obermatt assesses an overall buy recommendation for Sappi on August 31, 2023.
Snapshot: Obermatt Ranks
| Country | South Africa |
| Industry | Paper Products |
| Index | Energy Efficient, Good Governace Growth Markets, Human Rights, Independent Boards Growth Markets, Timber Industry, JSE All Shares |
| Size class | X-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 Sappi Buy
| 360 METRICS | August 31, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 99 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 25 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 57 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 47 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 67 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 67 (better than 67% compared with alternatives), overall professional sentiment and financial characteristics for the stock Sappi are above average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Sappi. The consolidated Value Rank has an attractive rank of 99, which means that the share price of Sappi is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 99% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 57. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 47. Professional investors are more confident in 53% other stocks. The consolidated Growth Rank also has a low rank of 25, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 75 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 67, Sappi is better positioned than 67% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 99), and the financing structure is on the safer side (Safety Rank of 57). However, sentiment in the professional investor community is below-average (Sentiment Rank of 47), as is the growth momentum for the company (Growth Rank of 25). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for Sappi only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 47 (better than 47% compared with alternatives), overall professional sentiment and engagement for the stock Sappi is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Sappi. Analyst Opinions are at a rank of 40 (worse than 60% 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 69, 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 Sappi. More encouragingly, the Professional Investors rank is 79, which means that professional investors hold more stock in this company than in 79% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 1, 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 99% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 47 (less encouraging than 53% compared with investment alternatives), Sappi has a reputation among professional investors that is below that of its competitors. The sentiment signals are mixed for Sappi. 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: Sappi Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 99 (better than 99% compared with alternatives) for 2023, Sappi shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Sappi. 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 Sappi's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 95% 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 93. Compared with other companies in the same industry, dividend yields of Sappi are expected to be higher than for 83% of all competitors (a Dividend Yield rank of 83). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 99, is a buy recommendation based on Sappi'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 Sappi based on its detailed value metrics.
Growth Strategy: Sappi Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 25 (better than 25% compared with alternatives), Sappi 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 three out of four indicators below average for Sappi. Only Capital Growth has a good rank of 98, which means that currently professionals expect the company to grow its invested capital more than 4% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 12 which means that currently professionals expect the company to grow less than 88% of its competitors. Profit Growth with a rank of 4 and Stock Returns with a rank of 31 are also low (below 69% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 25, is a hold recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Sappi is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more
Safety Strategy: Sappi Debt Financing Safety above-average
| SAFETY METRICS | August 31, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 20 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 93 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 47 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 57 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 57 (better than 57% compared with alternatives), the company Sappi 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 Sappi 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 just one indicator above average for Sappi and the other two below average. Refinancing is at 93, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 93% of its competitors. But Leverage is high with a rank of 20, meaning the company has an above-average debt-to-equity ratio. It has more debt than 80% of its competitors. Liquidity is also on the riskier side with a rank of 47, meaning the company generates less profit to service its debt than 53% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 57 (better than 57% compared with alternatives), Sappi has a financing structure that is safer than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for Sappi are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. ...read more
Combined financial peformance: Sappi Above-Average Financial Performance
| COMBINED PERFORMANCE | August 31, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 99 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 25 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 47 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 72 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 72 (better than 72% compared with investment alternatives), Sappi (Paper Products, South Africa) shares have above-average financial characteristics compared with similar stocks. Shares of Sappi are a good value (attractively priced) with a consolidated Value Rank of 99 (better than 99% of alternatives), are safely financed (Safety Rank of 57, which means low debt burdens), but show below-average growth (Growth Rank of 25). ...read more
RECOMMENDATION: A Combined Rank of 72, is a buy recommendation based on Sappi's financial characteristics. As the company Sappi's key financial metrics exhibit good value (Obermatt Value Rank of 99) but low growth (Obermatt Growth Rank of 25) while being safely financed (Obermatt Safety Rank of 57), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 99% 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
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.