October 10, 2024
Top 10 Stock ASML Buy 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: ASML – Top 10 Stock in EURO STOXX 50 Index
ASML is listed as a top 10 stock on October 10, 2024 in the market index EURO STOXX 50 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 55 (high 55% performer), Obermatt assesses an overall buy recommendation for ASML on October 10, 2024.
Snapshot: Obermatt Ranks
| Country | Netherlands |
| Industry | Semiconductor Equipment |
| Index | AEX, EURO STOXX 50, Employee Focus EU, Renewables Users, Recycling, NASDAQ 100, NASDAQ |
| Size class | XX-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 ASML Buy
| 360 METRICS | October 10, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 16 |
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| GROWTH | ||||||||
| GROWTH | 80 |
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| SAFETY | ||||||||
| SAFETY | 25 |
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| SENTIMENT | ||||||||
| SENTIMENT | 88 |
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| 360° VIEW | ||||||||
| 360° VIEW | 55 |
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ANALYSIS: With an Obermatt 360° View of 55 (better than 55% compared with alternatives), overall professional sentiment and financial characteristics for the stock ASML are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for ASML. The consolidated Growth Rank has a good rank of 80, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 80% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 88, which means that professional investors are more optimistic about the stock than for 88% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 16, which means that the share price of ASML is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 84% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 25, which means that the company has a financing structure that is riskier than those of 75% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 55, ASML is better positioned than 55% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 80), and professional market sentiment is positive (Sentiment Rank of 88), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for ASML very positive
ANALYSIS: With an Obermatt Sentiment Rank of 88 (better than 88% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock ASML is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for ASML. Analyst Opinions are at a rank of 79 (better than 79% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 85, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 85% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 46, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in ASML. There are also only so many institutional investors holding company stock with a Professional Investors rank of 48, which means that, currently, professional investors hold less stock in this company than in 52% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 88 (more positive than 88% compared with investment alternatives), ASML has a reputation among professional investors that is significantly higher than that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more
Value Strategy: ASML Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 16 (worse than 84% compared with alternatives), ASML shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for ASML. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 50% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: 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 ASML's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 28 which means that the stock price compared with what market professionals expect for future profit levels is higher than 72% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 1 is also low. Compared with invested capital, the stock price is higher than for 99% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 16, is a sell recommendation based on ASML's stock price compared with the company's operational size and dividend yields. Should dividend investors pick ASML? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose ASML only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: ASML Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 80 (better than 80% compared with alternatives) for 2024, ASML 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 half of the indicators below and half above average for ASML. Sales Growth has a rank of 86 which means that currently professionals expect the company to grow more than 86% of its competitors. Stock Returns are also above average with a rank of 76. But Capital Growth has only a rank of 40, which means that currently professionals expect the company to grow its invested capital less than 60% of its competitors. Profit Growth is also low, with a rank of only 48, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 80, is a buy recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 76% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more
Safety Strategy: ASML Debt Financing Safety below-average
| SAFETY METRICS | October 10, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 45 |
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| REFINANCING | ||||||||
| REFINANCING | 8 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 78 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 25 |
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ANALYSIS: With an Obermatt Safety Rank of 25 (better than 25% compared with alternatives), the company ASML has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of ASML 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 ASML. Liquidity is at 78, meaning the company generates more profit to service its debt than 78% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 8, 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 92% of its competitors. Leverage is also high at a rank of 45, which means that the company has an above-average debt-to-equity ratio. It has more debt than 55% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 25 (worse than 75% compared with alternatives), ASML has a financing structure that is 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: ASML Lowest Financial Performance
| COMBINED PERFORMANCE | October 10, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 16 |
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| GROWTH | ||||||||
| GROWTH | 80 |
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| SAFETY | ||||||||
| SAFETY | 78 |
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| COMBINED | ||||||||
| COMBINED | 23 |
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ANALYSIS: With an Obermatt Combined Rank of 23 (worse than 77% compared with investment alternatives), ASML (Semiconductor Equipment, Netherlands) shares have lower financial characteristics compared with similar stocks. Shares of ASML are low in value (priced high) with a consolidated Value Rank of 16 (worse than 84% of alternatives), and are riskily financed (Safety Rank of 25, which means above-average debt burdens) but show above-average growth (Growth Rank of 80). ...read more
RECOMMENDATION: A Combined Rank of 23, is a sell recommendation based on ASML's financial characteristics. As the company ASML shows low value with an Obermatt Value Rank of 16 (84% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 80% of comparable companies (Obermatt Growth Rank is 80). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 25 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for ASML, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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