March 21, 2024
Top 10 Stock ERG Hold 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: ERG – Top 10 Stock in Milano Italia Borsa Index MIB
ERG is listed as a top 10 stock on March 21, 2024 in the market index MIB because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 42 (42% performer), Obermatt assesses an overall hold recommendation for ERG on March 21, 2024.
Snapshot: Obermatt Ranks
| Country | Italy |
| Industry | Power Producers & Traders |
| Index | MIB, Human Rights |
| Size class | 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 ERG Hold
| 360 METRICS | March 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 13 |
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| GROWTH | ||||||||
| GROWTH | 83 |
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| SAFETY | ||||||||
| SAFETY | 65 |
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| SENTIMENT | ||||||||
| SENTIMENT | 25 |
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| 360° VIEW | ||||||||
| 360° VIEW | 42 |
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ANALYSIS: With an Obermatt 360° View of 42 (better than 42% compared with alternatives), overall professional sentiment and financial characteristics for the stock ERG are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for ERG. The consolidated Growth Rank has a good rank of 83, 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 83% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 65 which means that the company has a financing structure that is safer than 65% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 13 which means that the share price of ERG is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 87% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 25, which means that professional investors are more pessimistic about the stock than for 75% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 42, ERG is worse than 58% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 83), and the company is safely financed (Safety Rank of 65). However, professional market sentiment is low(Sentiment Rank of 25). The negative market view on ERG may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because 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 ERG compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth 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 value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for ERG only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 25 (better than 25% compared with alternatives), overall professional sentiment and engagement for the stock ERG is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for ERG. Analyst Opinions are at a rank of 48 (worse than 52% 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 13 which means that stock research experts are getting even more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 46, 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 54% of competitors). No wonder, the Professional Investors rank is only 45, which means that professional investors hold less stock in this company than in 55% of alternative investment opportunities. Pros tend to stay away from ERG, which may be due to a small company size but just as likely because of its relatively low Sentiment Rank. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 25 (less encouraging than 75% compared with investment alternatives), ERG has a reputation among professional investors that is below that of its competitors. Investors should be careful with this stock right now. Further research is required if an investment is desired, because the facts found in the professional community are all negative. ...read more
Value Strategy: ERG Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 13 (worse than 87% compared with alternatives), ERG shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for ERG. Price-to-Sales is 15 which means that the stock price compared with what market professionals expect for future profits is higher than 85% of comparable companies, indicating a low value concerning ERG's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 30, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of ERG. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 27 and Dividend Yield, which is lower than 57% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 13, is a sell recommendation based on ERG's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for ERG? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as ERG? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. ERG may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: ERG Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 83 (better than 83% compared with alternatives) for 2024, ERG 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 ERG. Sales Growth has a value of 82 which means that currently professionals expect the company to grow more than 82% of its competitors. Profit Growth with a value of 54 and Capital Growth with a rank of 78 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 29, which means that stock returns have recently been below 71% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 83, is a buy recommendation for growth and momentum investors. ERG has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for ERG, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. ...read more
Safety Strategy: ERG Debt Financing Safety above-average
| SAFETY METRICS | March 21, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 52 |
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| REFINANCING | ||||||||
| REFINANCING | 49 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 44 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 65 |
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ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), the company ERG 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 ERG 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 just one indicator above average for ERG and the other two below average. Leverage is at a rank of 52 meaning the company has a below-average debt-to-equity ratio. It has less debt than 52% of its competitors.Refinancing is at a rank of 49, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 51% of its competitors. Liquidity is at a rank of 44, meaning that the company generates less profit to service its debt than 56% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 65 (better than 65% compared with alternatives), ERG has a financing structure that is safer than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of ERG are on the safer side. ...read more
Combined financial peformance: ERG Lowest Financial Performance
| COMBINED PERFORMANCE | March 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 13 |
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| GROWTH | ||||||||
| GROWTH | 83 |
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| SAFETY | ||||||||
| SAFETY | 44 |
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| COMBINED | ||||||||
| COMBINED | 16 |
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ANALYSIS: With an Obermatt Combined Rank of 16 (worse than 84% compared with investment alternatives), ERG (Power Producers & Traders, Italy) shares have lower financial characteristics compared with similar stocks. Shares of ERG are low in value (priced high) with a consolidated Value Rank of 13 (worse than 87% of alternatives). But they show above-average growth (Growth Rank of 83) and are safely financed (Safety Rank of 65, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 16, is a sell recommendation based on ERG's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company ERG exhibits low value (Obermatt Value Rank of 13), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 83). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 65) 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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