December 7, 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 Independent Boards in Growth Markets
Sappi is listed as a top 10 stock on December 07, 2023 in the market index Independent Boards Growth Markets 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 53 (high 53% performer), Obermatt assesses an overall buy recommendation for Sappi on December 07, 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 | December 7, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 96 |
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| GROWTH | ||||||||
| GROWTH | 29 |
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| SAFETY | ||||||||
| SAFETY | 51 |
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| SENTIMENT | ||||||||
| SENTIMENT | 49 |
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| 360° VIEW | ||||||||
| 360° VIEW | 53 |
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ANALYSIS: With an Obermatt 360° View of 53 (better than 53% 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 96, 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 96% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 51. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 49. Professional investors are more confident in 51% other stocks. The consolidated Growth Rank also has a low rank of 29, 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. 71 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 53, Sappi is better positioned than 53% 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 96), and the financing structure is on the safer side (Safety Rank of 51). However, sentiment in the professional investor community is below-average (Sentiment Rank of 49), as is the growth momentum for the company (Growth Rank of 29). 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 49 (better than 49% 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 all but one indicator above average for Sappi. Analyst Opinions are at a rank of 53 (better than 53% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 68, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in Sappi. Finally, the Professional Investors rank is 69, which means that currently, professional investors hold more stock in this company than in 69% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 49 (less encouraging than 51% compared with investment alternatives), Sappi has a reputation among professional investors that is below that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 5, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 95% of competitors). This could mean future risks and should make investors careful. Attention to negative news for Sappi is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...read more
Value Strategy: Sappi Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 96 (better than 96% 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 81% of all competitors (a Dividend Yield rank of 81). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 96, 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 29 (better than 29% 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 80, which means that currently professionals expect the company to grow its invested capital more than 29% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 39 which means that currently professionals expect the company to grow less than 61% of its competitors. Profit Growth with a rank of 29 and Stock Returns with a rank of 25 are also low (below 75% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 29, 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 | December 7, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 20 |
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| REFINANCING | ||||||||
| REFINANCING | 93 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 67 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 51 |
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ANALYSIS: With an Obermatt Safety Rank of 51 (better than 51% 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 two out of three indicators above-average for Sappi. Refinancing is at 93, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 93% of its competitors. Liquidity is also good at 67, meaning the company generates more profit to service its debt than 67% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 20, which means the company has an above-average debt-to-equity ratio. It has more debt than 80% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 51 (better than 51% compared with alternatives), Sappi 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 Sappi 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. ...read more
Combined financial peformance: Sappi Above-Average Financial Performance
| COMBINED PERFORMANCE | December 7, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 96 |
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| GROWTH | ||||||||
| GROWTH | 29 |
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| SAFETY | ||||||||
| SAFETY | 67 |
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| COMBINED | ||||||||
| COMBINED | 52 |
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ANALYSIS: With an Obermatt Combined Rank of 52 (better than 52% 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 96 (better than 96% of alternatives), are safely financed (Safety Rank of 51, which means low debt burdens), but show below-average growth (Growth Rank of 29). ...read more
RECOMMENDATION: A Combined Rank of 52, 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 96) but low growth (Obermatt Growth Rank of 29) while being safely financed (Obermatt Safety Rank of 51), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 96% 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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