Stock Research
Emerging Companies
Sandstone Insights’ recommendations, Buy, Hold or Sell, are based on detailed qualitative and quantitative analysis of a company’s prospects to derive an estimated Total Shareholder Return (TSR) that an investor can expect over the next 12 months.
Total Shareholder Return (TSR) is the difference in a company's share price relative to our 12-month Target Price, plus any dividends/distributions expected over the next 12 months.
The result is expressed as a percentage (%) of the current share price.
The TSR recommendation structure is based on absolute returns rather than relative to a sector or index.
BUY
TSR is expected to be more than +10% in the 12 months from the date of recommendation
HOLD
TSR is expected to be between 0% and 10% in the 12 months from the date of recommendation
SELL
TSR is expected to be less than 0% in the 12 months from the date of recommendation
Sandstone Insights assesses each company's prospects to estimate its intrinsic value (valuation).
Valuations are derived using Sandstone Insights' financial models. Model inputs include historical financial data, market-consensus estimates, commodity prices, macroeconomic indicators, and peer benchmarks.
Valuation estimates form the basis of a Target Price. This is an estimate of where the share will trade in 12 months from the date of the report. A Target Price is based on our roll-forward valuation estimate and considers a range of factors not explicitly captured in the valuation. These factors include (but are not limited to) changes in market sentiment/volatility, or unforeseen events that may prevent a share price from reaching the Target Price.
Sandstone Insights’ recommendations are not static and are subject to revision as information and our assessment of companies' prospects change.
During periods of share price volatility, Recommendations and Target Prices may occasionally and temporarily be inconsistent with the above definitions.
We apply a maximum ±8% tolerance band to each of our recommendations, TSR, to account for market volatility. For a Buy recommendation, this is TSR >2%; for a Hold recommendation, between -8% and 18% TSR; and for a Sell recommendation, <8%.
When the TSR is outside the tolerance range for 30 consecutive calendar days, a new Target Price or Recommendation must be published to reflect the current share price and account for any new relevant factors, in accordance with the above methodology.
A company’s valuation is determined using a range of factors and inputs to estimate intrinsic value.
Sandstone Insights utilises a range of valuation techniques, including, but not limited to, Discounted Cash Flow (DCF), Dividend Discount Model (DDM), Net Asset Valuation (NAV), multiples, and Sum of the Parts (SOTP).
Each company has at least two valuation methodologies, which are blended to form a single valuation. Valuation forms the basis of a company’s Target Price.
Inputs into the valuation process can include:
Sandstone Insights’ model will derive a Key Properties profile based on important factors in assessing a company’s future performance. We consider the level and sustainability of a company’s income, the level of risk and the moat position, or the defensive characteristics of the company. Each of these factors is rated on a scale and explained as follows:
Sandstone Insights’ recommendations are of a general nature only and individuals must consider their own specific investment goals, risk tolerance, tax situation, time horizon, income needs, and complete investment portfolio, among other factors. This research methodology should be read in conjunction with the applicable disclaimers and disclosures, which can be found at: