July 6, 2023
Top 10 Stock Coal India 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: Coal India – Top 10 Stock in Nifty 50 India Index CNX Nifty 50
Coal India is listed as a top 10 stock on July 06, 2023 in the market index CNX Nifty 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 Coal India on July 06, 2023.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Coal & Consumable Fuels |
| Index | CNX Nifty 50 |
| 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 Coal India Buy
| 360 METRICS | July 6, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 32 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 65 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 20 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 77 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 55 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 55 (better than 55% compared with alternatives), overall professional sentiment and financial characteristics for the stock Coal India are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Coal India. The consolidated Growth Rank has a good rank of 65, 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 65% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 77, which means that professional investors are more optimistic about the stock than for 77% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 32, which means that the share price of Coal India 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 68% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 20, which means that the company has a financing structure that is riskier than those of 80% 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, Coal India 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 65), and professional market sentiment is positive (Sentiment Rank of 77), 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 Coal India very positive
ANALYSIS: With an Obermatt Sentiment Rank of 77 (better than 77% compared with alternatives) for 2022, overall professional sentiment and engagement for the stock Coal India is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Coal India. Analyst Opinions are at a rank of 31 (worse than 69% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 72, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Coal India. More encouragingly, the Professional Investors rank is 85, which means that professional investors hold more stock in this company than in 85% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 40, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 60% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 77 (more positive than 77% compared with investment alternatives), Coal India has a reputation among professional investors that is significantly higher than that of its competitors. The sentiment signals are mixed for Coal India. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: Coal India Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 32 (worse than 68% compared with alternatives), Coal India shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Coal India. Price-to-Profit (also referred to as price-earnings, P/E) is 51 which means that the stock price compared with what market professionals expect for future profits is lower than for 51% of comparable companies, indicating a good value concerning Coal India's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 19, which means that the stock price is lower as regards to invested capital than for 19% of comparable investments. On the other hand, Price-to-Sales is less favorable than 62% of alternatives (only 38% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 16% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 32, is a hold recommendation based on Coal India's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Coal India Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 65 (better than 65% compared with alternatives), Coal India shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Coal India. Capital Growth has a rank of 64, which means that currently professionals expect the company to grow its invested capital more than 36% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 83 (above 83% of alternative investments). But Sales Growth has only a rank of 39, which means that, currently, professionals expect the company to grow less than 61% of its competitors, and Profit Growth is also low at a rank of 36. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 65, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Coal India, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Coal India Debt Financing Safety risky
| SAFETY METRICS | July 6, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 76 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 65 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 100 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 20 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 20 (better than 20% compared with alternatives), the company Coal India has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Coal India 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, where all three are above average for Coal India. Leverage is at 76, meaning the company has a below-average debt-to-equity ratio. It has less debt than 76% of its competitors. Refinancing is at a rank of 65, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 65% of its competitors. Finally, Liquidity is also good at a rank of 100, which means that the company generates more profit to service its debt than 100% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 20 (worse than 80% compared with alternatives), Coal India has a financing structure that is significantly riskier 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: Coal India Lowest Financial Performance
| COMBINED PERFORMANCE | July 6, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 32 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 65 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 100 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 8 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 8 (worse than 92% compared with investment alternatives), Coal India (Coal & Consumable Fuels, India) shares have lower financial characteristics compared with similar stocks. Shares of Coal India are low in value (priced high) with a consolidated Value Rank of 32 (worse than 68% of alternatives), and are riskily financed (Safety Rank of 20, which means above-average debt burdens) but show above-average growth (Growth Rank of 65). ...read more
RECOMMENDATION: A Combined Rank of 8, is a sell recommendation based on Coal India's financial characteristics. As the company Coal India shows low value with an Obermatt Value Rank of 32 (68% 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 65% of comparable companies (Obermatt Growth Rank is 65). 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 20 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 Coal India, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.