October 31, 2024
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 October 31, 2024 in the market index CAC 40 because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 92 (top 92% performer), Obermatt assesses an overall strong buy recommendation for Michelin on October 31, 2024.
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 | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 40 |
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| GROWTH | ||||||||
| GROWTH | 80 |
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| SAFETY | ||||||||
| SAFETY | 94 |
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| SENTIMENT | ||||||||
| SENTIMENT | 64 |
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| 360° VIEW | ||||||||
| 360° VIEW | 92 |
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ANALYSIS: With an Obermatt 360° View of 92 (better than 92% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Michelin are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Michelin. 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 Safety Rank at 94 means that the company has a financing structure that is safer than 94% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 64, which means that professional investors are more optimistic about the stock than for 64% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 40, meaning that the share price of Michelin is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 60% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 92, Michelin is better positioned than 92% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 80), a safe financing structure (Safety Rank of 94), and positive professional market sentiment (Sentiment Rank of 64), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. 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 more do you pay for the stock of Michelin compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (80% better than peers). The value rank could be the reverse reflection of that (20%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the 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 Michelin positive
ANALYSIS: With an Obermatt Sentiment Rank of 64 (better than 64% compared with alternatives), overall professional sentiment and engagement for the stock Michelin is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half 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. Worse, Analyst Opinions Change has a rank of 7, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 70, which means that professional investors hold more stock in this company than in 70% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 87, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 87% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Michelin and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 64 (more positive than 64% compared with investment alternatives), Michelin has a reputation among professional investors that is above-average compared with that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Michelin Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 40 (worse than 60% 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 below average for Michelin. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 66% 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 24 which means that the stock price compared with what market professionals expect for future profits is higher than 76% of comparable companies, indicating a low value concerning Michelin's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 46 which means that the stock price compared with what market professionals expect for future profit levels is higher than 54% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 46 is also low. Compared with invested capital, the stock price is higher than for 54% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 40, is a hold recommendation based on Michelin's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Michelin? 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 Michelin only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Michelin Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 80 (better than 80% compared with alternatives) for 2024, Michelin 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 all but one indicator above average for Michelin. Profit Growth has a rank of 82 which means that currently professionals expect the company to grow its profits more than 82% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 55, and Stock Returns has a rank of 70 which means that the stock returns have recently been above 70% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 34 (66% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 80, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Michelin Debt Financing Safety very solid
| SAFETY METRICS | October 31, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 81 |
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| REFINANCING | ||||||||
| REFINANCING | 62 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 76 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 94 |
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ANALYSIS: With an Obermatt Safety Rank of 94 (better than 94% compared with alternatives) for 2024, 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 81, meaning the company has a below-average debt-to-equity ratio. It has less debt than 81% of its competitors. Refinancing is at a rank of 62, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 62% of its competitors. Finally, Liquidity is also good at a rank of 76, which means that the company generates more profit to service its debt than 76% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 94 (better than 94% 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 Top Financial Performance
| COMBINED PERFORMANCE | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 40 |
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| GROWTH | ||||||||
| GROWTH | 80 |
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| SAFETY | ||||||||
| SAFETY | 76 |
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| COMBINED | ||||||||
| COMBINED | 96 |
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ANALYSIS: With an Obermatt Combined Rank of 96 (better than 96% compared with investment alternatives), Michelin (Tires & Rubber, France) shares have much better financial characteristics than comparable stocks. Shares of Michelin are low in value (priced high) with a consolidated Value Rank of 40 (worse than 60% of alternatives). But they show above-average growth (Growth Rank of 80) and are safely financed (Safety Rank of 94, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 96, is a strong buy recommendation based on Michelin's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Michelin exhibits low value (Obermatt Value Rank of 40), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 80). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 94) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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