Fact based stock research
The a2 Milk Company (NZSE:ATM)

NZATME0002S8

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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.

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The a2 Milk Company stock research in summary

thea2milkcompany.com

ANALYSIS: With an Obermatt Combined Rank of 59 (better than 59% compared with investment alternatives), The a2 Milk Company (Packaged Foods & Meats, New Zealand) shares have above-average financial characteristics compared with similar stocks. Shares of The a2 Milk Company are low in value (priced high) with a consolidated Value Rank of 7 (worse than 93% of alternatives). But they show above-average growth (Growth Rank of 93) and are safely financed (Safety Rank of 65, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 59, is a buy recommendation based on The a2 Milk Company's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company The a2 Milk Company exhibits low value (Obermatt Value Rank of 7), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 93). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 65) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	7
Growth Rank	93
Safety Rank	65
Combined Rank	59

Country	New Zealand
Industry	Packaged Foods & Meats
Index	ASX 100, ASX 200, ASX 300, ASX 50, NZSX 50
Size class	Large

This stock has achievements: Top 10 Stock.

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Research History: The a2 Milk Company

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	16	5	6	7
GROWTH
GROWTH	1	89	67	93
SAFETY
SAFETY	92	85	71	65
SENTIMENT
SENTIMENT	n/a	39	56	^new
360° VIEW
360° VIEW	n/a	51	50	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better The a2 Milk Company is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	16	5	6	7
GROWTH
GROWTH	1	89	67	93
SAFETY
SAFETY	92	85	71	65
COMBINED
COMBINED	24	79	42	59

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of The a2 Milk Company the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 7 (worse than 93% compared with alternatives), The a2 Milk Company shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for The a2 Milk Company. Price-to-Sales is 7 which means that the stock price compared with what market professionals expect for future profits is higher than 93% of comparable companies, indicating a low value concerning The a2 Milk Company's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 11, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of The a2 Milk Company. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 17 and Dividend Yield, which is lower than 92% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 7, is a sell recommendation based on The a2 Milk Company's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for The a2 Milk Company? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as The a2 Milk Company? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. The a2 Milk Company may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	31	11	15	7
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	33	7	26	17
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	34	9	13	11
DIVIDEND YIELD
DIVIDEND YIELD	1	12	8	8
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	16	5	6	7

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of The a2 Milk Company; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 93 (better than 93% compared with alternatives) for 2024, The a2 Milk Company shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for The a2 Milk Company. Sales Growth has a rank of 92 which means that currently, professionals expect the company to grow more than 92% of its competitors. Capital Growth is also above 40% of competitors with a rank of 80, and Stock Returns with the rank of 95 is also an outperformance. Only Profit Growth is low with a rank of 40 which means that currently, professionals expect the company to grow its profits less than 60% of its competitors. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 93, is a buy recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, The a2 Milk Company is a good growth stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	3	96	88	92
PROFIT GROWTH
PROFIT GROWTH	100	72	37	40
CAPITAL GROWTH
CAPITAL GROWTH	n/a	91	100	80
STOCK RETURNS
STOCK RETURNS	8	1	5	95
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	1	89	67	93

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of The a2 Milk Company.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), the company The a2 Milk Company 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 The a2 Milk Company 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 The a2 Milk Company. Leverage is at a rank of 86, meaning the company has a below-average debt-to-equity ratio. It has less debt than 86% of its competitors. Liquidity is also good at a rank of 59, meaning the company generates more profit to service its debt than 59% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 39, 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 61% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 65 (better than 65% compared with alternatives), The a2 Milk Company has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for The a2 Milk Company. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. Investors may have a short-term debt challenge with The a2 Milk Company and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	96	96	82	86
REFINANCING
REFINANCING	20	45	33	39
LIQUIDITY
LIQUIDITY	97	87	67	59
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	92	85	71	65

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of The a2 Milk Company and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	25	54	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	35	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	39	58	^new
MARKET PULSE
MARKET PULSE	n/a	87	76	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	39	56	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for The a2 Milk Company.
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