June 20, 2024
Top 10 Stock Commonwealth Bank of Australia Sell 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: Commonwealth Bank of Australia – Top 10 Stock in Australian Securities Exchange Index ASX 50
Commonwealth Bank of Australia is listed as a top 10 stock on June 20, 2024 in the market index ASX 50 because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is safely financed, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 6 (6% performer), Obermatt issues an overall sell recommendation for Commonwealth Bank of Australia on June 20, 2024.
Snapshot: Obermatt Ranks
| Country | Australia |
| Industry | Diversified Banks |
| Index | ASX 100, ASX 200, ASX 300, ASX 50, Human Rights, Renewables Users |
| 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 Commonwealth Bank of Australia Sell
| 360 METRICS | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 6 |
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| GROWTH | ||||||||
| GROWTH | 4 |
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| SAFETY | ||||||||
| SAFETY | 72 |
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| SENTIMENT | ||||||||
| SENTIMENT | 32 |
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| 360° VIEW | ||||||||
| 360° VIEW | 6 |
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ANALYSIS: With an Obermatt 360° View of 6 (better than 6% compared with alternatives), overall professional sentiment and financial characteristics for the stock Commonwealth Bank of Australia are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four metrics below average for Commonwealth Bank of Australia. The only rank that is above average is the consolidated Safety Rank at 72, which means that the company has a financing structure that is safer than those of 72% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the Value, Growth and Sentiment Ranks are all below average. The consolidated Value Rank has a less desirable rank of 6, which means that the share price of Commonwealth Bank of Australia is on the high side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 4, which implies that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. Finally, the consolidated Sentiment Rank is also low at a rank of 32, which means that professional investors are more pessimistic about the stock than for 68% of alternative investment opportunities. While Safety is strong, it’s not the most critical indicator, so we suggest proceeding with caution if you are considering this stock. ...read more
RECOMMENDATION: With a consolidated 360° View of 6, Commonwealth Bank of Australia is worse than 94% of all alternative stock investment opportunities based on the Obermatt Method. This means that Commonwealth Bank of Australia shares are on the riskier side for investors. As only the financing structure, namely the Safety Rank, is on the safer side and all other consolidated Obermatt Ranks are below-average, this is a riskier stock investment proposition. This is especially the case, since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 32. The negative market view on Commonwealth Bank of Australia may be the high stock price (low value) or the low level of growth. This is a problem. As the Safety Rank is the least significant of the four consolidated Obermatt Ranks, we cannot identify enough positive facts that are visible today to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not visible from investor behavior today. As market sentiment is critical, you should be careful with paying more than market-average for this stock, and conduct further research into the company's future growth potential. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Commonwealth Bank of Australia only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 32 (better than 32% compared with alternatives), overall professional sentiment and engagement for the stock Commonwealth Bank of Australia is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Commonwealth Bank of Australia. Analyst Opinions are at a rank of 1 (worse than 99% 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 50, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Commonwealth Bank of Australia. Even better, the Professional Investors rank is 68, meaning that professional investors hold more stock in this company than in 68% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 55, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 55% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 32 (less encouraging than 68% compared with investment alternatives), Commonwealth Bank of Australia has a reputation among professional investors that is below that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Commonwealth Bank of Australia Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 6 (worse than 94% compared with alternatives), Commonwealth Bank of Australia 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 Commonwealth Bank of Australia. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 51% 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 8 which means that the stock price compared with what market professionals expect for future profits is higher than 92% of comparable companies, indicating a low value concerning Commonwealth Bank of Australia's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 3 which means that the stock price compared with what market professionals expect for future profit levels is higher than 97% 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 6, is a sell recommendation based on Commonwealth Bank of Australia's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Commonwealth Bank of Australia? 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 Commonwealth Bank of Australia only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Commonwealth Bank of Australia Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 4 (better than 4% compared with alternatives), Commonwealth Bank of Australia 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 all four metrics below average for Commonwealth Bank of Australia. Sales Growth has a rank of 26, which means that currently professionals expect the company to grow less than 74% of its competitors. The same is valid for Profit Growth, with a rank of 19, and Capital Growth with 5. In addition, Stock Returns have a below market rank of 37, which means that the stock returns have recently been below 63% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 4, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Commonwealth Bank of Australia Debt Financing Safety above-average
| SAFETY METRICS | June 20, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 36 |
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| REFINANCING | ||||||||
| REFINANCING | 63 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 74 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 72 |
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ANALYSIS: With an Obermatt Safety Rank of 72 (better than 72% compared with alternatives), the company Commonwealth Bank of Australia 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 Commonwealth Bank of Australia 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 Commonwealth Bank of Australia. Refinancing is at 63, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 63% of its competitors. Liquidity is also good at 74, meaning the company generates more profit to service its debt than 74% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 36, which means the company has an above-average debt-to-equity ratio. It has more debt than 64% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 72 (better than 72% compared with alternatives), Commonwealth Bank of Australia has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Commonwealth Bank of Australia could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Commonwealth Bank of Australia Lowest Financial Performance
| COMBINED PERFORMANCE | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 6 |
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| GROWTH | ||||||||
| GROWTH | 4 |
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| SAFETY | ||||||||
| SAFETY | 74 |
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| COMBINED | ||||||||
| COMBINED | 6 |
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ANALYSIS: With an Obermatt Combined Rank of 6 (worse than 94% compared with investment alternatives), Commonwealth Bank of Australia (Diversified Banks, Australia) shares have lower financial characteristics compared with similar stocks. Shares of Commonwealth Bank of Australia are low in value (priced high) with a consolidated Value Rank of 6 (worse than 94% of alternatives) and show below-average growth (Growth Rank of 4) but are safely financed (Safety Rank of 72), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 6, is a sell recommendation based on Commonwealth Bank of Australia's financial characteristics. As the company Commonwealth Bank of Australia's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 6) and low growth (Obermatt Growth Rank of 4), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 72) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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