Investec Stock Analysis: Summary

Brief, easy-to-understand analysis for beginners

About

Investec offers a range of financial services to private, corporate, and institutional clients in South Africa and the UK. The group was established in 1974 and currently has approximately 8 300 employees. 

Business

Investec now operates in three segments: Wealth & Investment, Specialist Banking, and Group investments. 

Revenue drivers

Segment revenue contribution is as follows: 72% Specialist banking, 23% Wealth& Investments, and 5% Group Investments. 

Investecs revenue avenues consist mostly of banking interest, fees, and commissions.

Geographically, income is generated more or less equally between South Africa and the UK. 

Financials

The overall 2022 performance led to strong earnings recovery above pre-pandemic levels. Banking interest increased by 21.5% in 2022, whilst fees and commissions increased by 21.1%.

Although Investec delivered brilliant 2022 results, the 10-year-picture does not look so appealing. Long-term growth is always more important than short-term growth. The 10-year average growth rate in income is only 0.68%.  This is never what you want to see as an investor. Rule nr 1 is strong revenue growth.

Buy/Hold/Sell

Investec has a very strong brand and is known for delivering excellent services. The financials look good, but the lack of revenue growth and valuation metrics have shifted the stock from the undervalued category into the fairly valued category in our opinion.

Will we bank at Invested? Of course. Will we invest in it? Not at the moment, as we believe there are better opportunities currently in the market. Watchlist it is.   

Just a friendly reminder - This is not financial advice. Always do your own research before taking a position. Content is for informational and educational purposes only.