August 31, 2023
Top 10 Stock Spar Sell 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: Spar – Top 10 Stock in Johannesburg Securities Exchange All Shares Index JSE All Shares
Spar 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. Only the Obermatt Value Rank exhibits above-average performance, which means that the stock is seen as critical by the professional community and other financial facts are below average, conveying mixed investment signals. Based on the Obermatt 360° View of 14 (14% performer), Obermatt issues an overall sell recommendation for Spar on August 31, 2023.
Snapshot: Obermatt Ranks
| Country | South Africa |
| Industry | Food Distributors |
| Index | Good Governace Growth Markets, Independent Boards Growth Markets, 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 Spar Sell
| 360 METRICS | August 31, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 97 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 7 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 24 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 7 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 14 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 14 (better than 14% compared with alternatives), overall professional sentiment and financial characteristics for the stock Spar are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Spar. Only the consolidated Value Rank has an attractive rank of 97, which means that the share price of Spar is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 97% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 7, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The consolidated Safety Rank has a riskier rank of 24, meaning the company has a riskier financing structure than 76% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, professionals are more pessimistic about the stock than for 93% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 7. ...read more
RECOMMENDATION: With a consolidated 360° View of 14, Spar is worse than 86% of all alternative stock investment opportunities based on the Obermatt Method. This means that Spar shares are on the riskier side for investors. Only one of the consolidated Obermatt Ranks exhibits above-average performance, namely the Value Rank at a level of 97. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 7), a riskier financing structure than the competition (Safety Rank of 24), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 7) is negative. This combination is sensitive to a crisis, because high debt levels (low safety) require growth to finance the debt burden. It’s no wonder that the investor community indicators are skeptical (low sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. We recommend evaluating whether the future of Spar is as challenging as the low price of the stock suggests. Since the professional community is pessimistic, you might need to worry about the future of Spar. Only invest if you have solid reasons to believe that the low growth is temporary and the current market sentiment is an overreaction, possibly due to reputational issues in the past. ...read more
Sentiment Strategy: Professional Market Sentiment for Spar negative
ANALYSIS: With an Obermatt Sentiment Rank of 7 (better than 7% compared with alternatives), overall professional sentiment and engagement for the stock Spar is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Spar. Analyst Opinions are at a rank of 34 (worse than 66% 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 50, which means that stock research experts have found something to make them more positive about investing in the company. In other words, they are getting more optimistic of stock investments in Spar. But the Professional Investors rank is low at 13, which means that professional investors hold less stock in this company than in 87% of alternative investment opportunities. Pros tend to invest in other companies. Market Pulse is also low at a rank of 2, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 98% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 7 (less encouraging than 93% compared with investment alternatives), Spar has a reputation among professional investors that is far below that of its competitors. These are quite a few negative sentiment signals. One may want to trust the analysts that are changing their opinions. They may be early indications of better times, especially if the company is a smaller one. But If they are an extra large company, they should have more professional stockholders than are currently present. ...read more
Value Strategy: Spar Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 97 (better than 97% compared with alternatives) for 2023, Spar shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Spar. Price-to-Sales is 95 which means that the stock price compared with what market professionals expect for future sales is lower than for 95% of comparable companies, indicating a good value for Spar's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 89% 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 67. Compared with other companies in the same industry, dividend yields of Spar are expected to be higher than for 90% of all competitors (a Dividend Yield rank of 90). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 97, is a buy recommendation based on Spar'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 Spar based on its detailed value metrics.
Growth Strategy: Spar Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 7 (better than 7% compared with alternatives), Spar 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 three out of four indicators below average for Spar. Only Capital Growth has a good rank of 77, which means that currently professionals expect the company to grow its invested capital more than 14% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 16 which means that currently professionals expect the company to grow less than 84% of its competitors. Profit Growth with a rank of 14 and Stock Returns with a rank of 17 are also low (below 83% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 7, is a sell 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 Spar 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: Spar Debt Financing Safety risky
| SAFETY METRICS | August 31, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 9 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 23 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 60 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 24 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 24 (better than 24% compared with alternatives), the company Spar has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Spar is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Spar. Liquidity is at 60, meaning the company generates more profit to service its debt than 60% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 23, 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 77% of its competitors. Leverage is also high at a rank of 9, which means that the company has an above-average debt-to-equity ratio. It has more debt than 91% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 24 (worse than 76% compared with alternatives), Spar has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Spar Below-Average Financial Performance
| COMBINED PERFORMANCE | August 31, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 97 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 7 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 60 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 28 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 28 (worse than 72% compared with investment alternatives), Spar (Food Distributors, South Africa) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Spar are a good value (attractively priced) with a consolidated Value Rank of 97 (better than 97% of alternatives) but show below-average growth (Growth Rank of 7), and are riskily financed (Safety Rank of 24), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 28, is a hold recommendation based on Spar's financial characteristics. As the company Spar's key financial metrics exhibit good value (Obermatt Value Rank of 97) but low growth (Obermatt Growth Rank of 7) and risky financing practices (Obermatt Safety Rank of 24), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 97% of comparable companies, may indicate 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. ...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.