August 10, 2023
Top 10 Stock Michelin 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: Michelin – Top 10 Stock in Cotation Assistée en Continu Index CAC 40
Michelin is listed as a top 10 stock on August 10, 2023 in the market index CAC 40 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the 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 87 (top 87% performer), Obermatt assesses an overall strong buy recommendation for Michelin on August 10, 2023.
Snapshot: Obermatt Ranks
| Country | France |
| Industry | Tires & Rubber |
| Index | CAC 40, CAC All, SBF 120, Employee Focus EU, Energy Efficient |
| 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 Michelin Strong Buy
| 360 METRICS | August 10, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 43 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 89 |
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| SENTIMENT | ||||||||
| SENTIMENT | 99 |
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| 360° VIEW | ||||||||
| 360° VIEW | 87 |
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ANALYSIS: With an Obermatt 360° View of 87 (better than 87% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock Michelin are very positive. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Michelin. The consolidated Sentiment Rank has a good rank of 99, which means that professional investors are more optimistic about the stock than for 99% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 89 or better than 89% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 43, meaning that the share price of Michelin is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 25. ...read more
RECOMMENDATION: With a consolidated 360° View of 87, Michelin is better positioned than 87% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 99) and safe financing practices (Safety Rank of 89), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of Micheliṇ is bright. 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 Michelin very positive
ANALYSIS: With an Obermatt Sentiment Rank of 99 (better than 99% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Michelin is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Michelin. Analyst Opinions are at a rank of 41 (worse than 59% 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 79, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Michelin. Even better, the Professional Investors rank is 97, meaning that professional investors hold more stock in this company than in 97% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 90, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 90% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 99 (more positive than 99% compared with investment alternatives), Michelin has a reputation among professional investors that is significantly higher than 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: Michelin Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 43 (worse than 57% compared with alternatives), Michelin shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Michelin. Price-to-Profit (also referred to as price to earnings, P/E ratio) is 55 which means that the stock price compared with what market professionals expect for future profits is lower than for 55% of comparable companies, indicating a good value concerning Michelin's profit levels. The same is valid for the expected Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 53, and for Dividend Yield with a Dividend Yield Rank of 77. But, compared with other companies in the same industry, the stock price is higher than average as regards expected revenues; only 62% of all competitors have an even higher stock price as regards to sales revenues (a Price-to-Sales Rank of 38). Profits, the level of invested capital, and dividend policy suggest that this stock is attractively priced. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 43, is a hold recommendation based on Michelin's stock price compared with the company's operational size and dividend yields. Since it is on the expensive side for Price-to-Sales, it may mean that Michelin has pricing power in its distribution market because it can charge higher prices than its competitors. If this is the case, all four value indicators are positive signals for purchasing Michelin shares. ...read more
Growth Strategy: Michelin Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 25 (better than 25% compared with alternatives), Michelin shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Michelin. Sales Growth has a below market rank of 15, which means that, currently, professionals expect the company to grow less than 85% of its competitors. The same is valid for Capital Growth, with a rank of 40, and Profit Growth, with a rank of 42. Currently, professionals expect the company to grow its profits less than 58% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 61, which means that the stock returns have recently been above 61% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 25, is a hold recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Michelin, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: Michelin Debt Financing Safety very solid
| SAFETY METRICS | August 10, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 78 |
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| REFINANCING | ||||||||
| REFINANCING | 63 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 66 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 89 |
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ANALYSIS: With an Obermatt Safety Rank of 89 (better than 89% compared with alternatives) for 2023, the company Michelin has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Michelin 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 Michelin. Leverage is at 78, meaning the company has a below-average debt-to-equity ratio. It has less debt than 78% of its competitors. Refinancing is at a rank of 63, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 63% of its competitors. Finally, Liquidity is also good at a rank of 66, which means that the company generates more profit to service its debt than 66% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 89 (better than 89% compared with alternatives), Michelin 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: Michelin Above-Average Financial Performance
| COMBINED PERFORMANCE | August 10, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 43 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 66 |
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| COMBINED | ||||||||
| COMBINED | 59 |
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ANALYSIS: With an Obermatt Combined Rank of 59 (better than 59% compared with investment alternatives), Michelin (Tires & Rubber, France) shares have above-average financial characteristics compared with similar stocks. Shares of Michelin are low in value (priced high) with a consolidated Value Rank of 43 (worse than 57% of alternatives) and show below-average growth (Growth Rank of 25) but are safely financed (Safety Rank of 89), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 59, is a buy recommendation based on Michelin's financial characteristics. As the company Michelin's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 43) and low growth (Obermatt Growth Rank of 25), 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 89) 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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