July 27, 2023
Top 10 Stock ATCO Strong 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: ATCO – Top 10 Stock in Toronto Stock Exchange Index TSX Composite
ATCO is listed as a top 10 stock on July 27, 2023 in the market index TSX Composite because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 91 (top 91% performer), Obermatt assesses an overall strong buy recommendation for ATCO on July 27, 2023.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | Multi-Utilities |
| Index | TSX Composite |
| Size class | X-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 ATCO Strong Buy
| 360 METRICS | July 27, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 99 |
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| GROWTH | ||||||||
| GROWTH | 23 |
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| SAFETY | ||||||||
| SAFETY | 93 |
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| SENTIMENT | ||||||||
| SENTIMENT | 51 |
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| 360° VIEW | ||||||||
| 360° VIEW | 91 |
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ANALYSIS: With an Obermatt 360° View of 91 (better than 91% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock ATCO are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for ATCO. The consolidated Value Rank has an attractive rank of 99, which means that the share price of ATCO is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 99% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 93. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 51. But the consolidated Growth Rank has a low rank of 23, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 77 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 91, ATCO is better positioned than 91% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 99), secure financing practices (Safety Rank of 93), and positive market sentiment in the professional investor community (Sentiment Rank of 51). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 23), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of ATCO is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for ATCO positive
ANALYSIS: With an Obermatt Sentiment Rank of 51 (better than 51% compared with alternatives), overall professional sentiment and engagement for the stock ATCO is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for ATCO. Analyst Opinions are at a rank of 66 (better than 66% 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 52, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 52% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 39, 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 ATCO. There are also only so many institutional investors holding company stock with a Professional Investors rank of 43, which means that, currently, professional investors hold less stock in this company than in 57% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 51 (more positive than 51% compared with investment alternatives), ATCO has a reputation among professional investors that is above-average compared with 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: ATCO Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 99 (better than 99% compared with alternatives) for 2023, ATCO shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for ATCO. Price-to-Sales is 96 which means that the stock price compared with what market professionals expect for future sales is lower than for 96% of comparable companies, indicating a good value for ATCO's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 92% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 95. Compared with other companies in the same industry, dividend yields of ATCO are expected to be higher than for 83% of all competitors (a Dividend Yield rank of 83). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 99, is a buy recommendation based on ATCO's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in ATCO based on its detailed value metrics.
Growth Strategy: ATCO Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 23 (better than 23% compared with alternatives), ATCO shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four metrics below average for ATCO. While Profit Growth has a good rank of 72, as professionals currently expect the company to grow its profits more than 72% of its competitors, all other growth indicators are below market averages. Sales Growth has a rank of 41, which means that currently professionals expect the company to grow less than 59% of its competitors, while Capital Growth has a rank of 27 and Stock Returns have been below market median, with a rank of 17 (83% of alternative investments were better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 23, is a sell recommendation for growth and momentum investors. While revenue growth and capital growth are good growth momentum indicators, profit is less reliable, because profits may increase due to cost-cutting measures which typically indicate negative growth momentum. "You can save a dollar only once" is the saying about such situations. Growth Investors should look at company priorities closely if they are interested in growth, because the increase in profits is not usually an indicator of growth, and stock prices have been below market, too. ...read more
Safety Strategy: ATCO Debt Financing Safety very solid
| SAFETY METRICS | July 27, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 70 |
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| REFINANCING | ||||||||
| REFINANCING | 91 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 57 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 93 |
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ANALYSIS: With an Obermatt Safety Rank of 93 (better than 93% compared with alternatives) for 2023, the company ATCO has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of ATCO 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, where all three are above average for ATCO. Leverage is at 70, meaning the company has a below-average debt-to-equity ratio. It has less debt than 70% of its competitors. Refinancing is at a rank of 91, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 91% of its competitors. Finally, Liquidity is also good at a rank of 57, which means that the company generates more profit to service its debt than 57% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 93 (better than 93% compared with alternatives), ATCO has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: ATCO Top Financial Performance
| COMBINED PERFORMANCE | July 27, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 99 |
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| GROWTH | ||||||||
| GROWTH | 23 |
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| SAFETY | ||||||||
| SAFETY | 57 |
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| COMBINED | ||||||||
| COMBINED | 95 |
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ANALYSIS: With an Obermatt Combined Rank of 95 (better than 95% compared with investment alternatives), ATCO (Multi-Utilities, Canada) shares have much better financial characteristics than comparable stocks. Shares of ATCO are a good value (attractively priced) with a consolidated Value Rank of 99 (better than 99% of alternatives), are safely financed (Safety Rank of 93, which means low debt burdens), but show below-average growth (Growth Rank of 23). ...read more
RECOMMENDATION: A Combined Rank of 95, is a strong buy recommendation based on ATCO's financial characteristics. As the company ATCO's key financial metrics exhibit good value (Obermatt Value Rank of 99) but low growth (Obermatt Growth Rank of 23) while being safely financed (Obermatt Safety Rank of 93), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 99% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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