LOW: Hold + Add
Published 16 Sep 2026, 16:39 BST. This is the frozen version, not the current recommendation.
Why this assessment was issued
Stored financial statements changed; the revised figures need checking. The model version changed. The published model version has been replaced. Record the new calculation basis even if the rating is unchanged. The valuation supports a measured positive view, but the full Buy requirements are not met. Review borrowing.
The valuation supports a measured positive view, but the full Buy requirements are not met. Review borrowing.
Supporting evidence
Quarterly sales are growing
Revenue changed +8.3% from the same quarter last year, through 2026-07-31. The previous quarter’s year-on-year change was +10.3%.
Operating cash covers reported profit
Over the latest four quarters, operating cash was 1.39 times net income. Review receivables, inventory and non-cash charges before judging the gap.
Opposing evidence
Year-to-date profit is lower
Across 2 completed quarters since 2026-01-31, net income was 4,027.0m versus 4,039.0m in the matching prior-year periods (USD). Check whether the latest quarter changes that direction.
Earnings forecasts have fallen
The estimate for the period ending 2027-01-31 changed -1.3% over 30 days. Coverage is 32 analysts.
The original scenarios
| Scenario | Sales growth | Profit margin | Model value |
|---|---|---|---|
| Weaker | 4.3% | 7.0% | $213.87 |
| Central | 9.3% | 7.8% | $278.18 |
| Stronger | 14.3% | 8.6% | $353.80 |
Method: Earnings and historical valuation. A sufficiently complete, positive earnings record allows the stock's own P/E history to be used. These scenarios are not probability intervals.
Original assumptions and checks
| eps | 12.47 |
|---|---|
| cash | 3172000000.0 |
| debt | 42023000000.0 |
| years | 1.1143052703627652 |
| growth | 9.29892655646979 |
| margin | 7.345851026185421 |
| profit | 6643000000.0 |
| cash_ok | True |
| debt_ok | False |
| growths | [3.187902825979183, 10.946426646545216, 10.2627806975633, 8.335072415376278] |
| revenue | 90432000000.0 |
| downside | 0 |
| leverage | 3.0457039824396364 |
| multiple | 18.954090150250416 |
| free_cash | 7000000000.0 |
| buy_hurdle | 15 |
| volatility | 25.866422581877856 |
| history_end | 2026-09-11 |
| reward_risk | Not available |
| annual_years | 5 |
| usable_weeks | 157 |
| history_start | 2023-09-15 |
| history_weeks | 157 |
| financial_date | 2026-07-31 |
| interest_cover | 6.468887492143306 |
| operating_cash | 9263000000.0 |
| uncapped_growth | 9.29892655646979 |
| current_multiple | 15.783480352846832 |
| projected_margin | 7.830130857644184 |
| historical_margin | 8.314410689102946 |
Recent price · Passed. Weekly close dated 2026-09-11.
Suitable business model · Passed. Value operating cash flow or comparable earnings; deduct debt and other ownership claims where appropriate.
Four quarters · Passed. Four quarters ending 2026-07-31.
Current financials · Passed. Statements through 2026-07-31; factor prices dated 2026-09-11.
Annual record · Passed. 5 consecutive annual profit margins, including loss years.
Comparable earnings history · Passed. P/E is usable in 157 of 157 weeks. At least 52 usable weeks and 70% coverage are required; excluding too many loss or missing weeks would bias the target.
Earnings and price dates · Passed. Earnings-release EPS $12.47, for four quarters ending 2026-07-31.
Price risk · Passed. Risk uses the latest 52 weekly price changes.
Comparable sales growth · Passed. Growth uses the median of four quarterly year-on-year comparisons.
Positive statement earnings · Passed. Trailing statement profit is positive.
Earnings reconciliation · Passed. Release EPS is $12.47; statement-derived EPS is $11.85. The difference is within the 5% review threshold; this does not prove there are no unusual items.
Statement totals · Passed. The latest four quarters agree with the trailing snapshot within 5%.
Cash and borrowing · Passed. Cash generation, debt and interest-cover figures are available.
Target publication review · Passed. The model estimate is within SM's automatic publication range of one quarter to four times the current price. This is a review threshold, not evidence that the market price is correct.
Policy sm-review-2-research · Model sm-assessment-14-operating-capital · Data 4f2e8784d5a9.