July 18, 2024
Top 10 Stock Erie Indemnity 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: Erie Indemnity – Top 10 Stock in Dow Jones U.S. Insurance Index
Erie Indemnity is listed as a top 10 stock on July 18, 2024 in the market index D.J. US Insurance 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 88 (top 88% performer), Obermatt assesses an overall strong buy recommendation for Erie Indemnity on July 18, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Property & Casualty Insurance |
| Index | NASDAQ, D.J. US Insurance |
| 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 Erie Indemnity Strong Buy
| 360 METRICS | July 18, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 10 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 99 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 52 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 90 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 88 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 88 (better than 88% compared with alternatives) for 2022, overall professional sentiment and financial characteristics for the stock Erie Indemnity are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Erie Indemnity. The consolidated Growth Rank has a good rank of 99, 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 99% of competitors in the same industry. The consolidated Safety Rank at 52 means that the company has a financing structure that is safer than 52% 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 90, which means that professional investors are more optimistic about the stock than for 90% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 10, meaning that the share price of Erie Indemnity is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 90% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 88, Erie Indemnity is better positioned than 88% 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 99), a safe financing structure (Safety Rank of 52), and positive professional market sentiment (Sentiment Rank of 90), 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 Erie Indemnity compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (99% better than peers). The value rank could be the reverse reflection of that (1%). 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 Erie Indemnity very positive
ANALYSIS: With an Obermatt Sentiment Rank of 90 (better than 90% compared with alternatives) for 2022, overall professional sentiment and engagement for the stock Erie Indemnity is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Erie Indemnity. Analyst Opinions are at a rank of 95 (better than 95% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 50, which means that currently, stock research experts are getting even more optimistic. Obermatt Market Pulse further supports this with a rank of 95, which means that the current professional news and professional social networks are generally positive when discussing this company (more positive news than for 95% of competitors). But there are few stock holdings by institutional investors. The Professional Investors rank is low at 28, which means that currently, professional investors hold less stock in this company than in 72% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 90 (more positive than 90% compared with investment alternatives), Erie Indemnity has a reputation among professional investors that is significantly higher than that of its competitors. Not having too many professionals invested in Erie Indemnity may be less of an issue, especially if the stock is from a smaller company where professionals typically invest less. It is natural for professional investors to focus on large and extra-large companies, as they provide more safety. Smaller companies attract fewer professionals in the shareholder community. Overall, the signals from the professionals are still quite favorable for investments in Erie Indemnity. ...read more
Value Strategy: Erie Indemnity Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 10 (worse than 90% compared with alternatives), Erie Indemnity 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 Erie Indemnity. Price-to-Sales is 11 which means that the stock price compared with what market professionals expect for future profits is higher than 89% of comparable companies, indicating a low value concerning Erie Indemnity's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 5, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Erie Indemnity. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 3 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 10, is a sell recommendation based on Erie Indemnity's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Erie Indemnity? 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 Erie Indemnity? 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. Erie Indemnity 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: Erie Indemnity Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 99 (better than 99% compared with alternatives) for 2022, Erie Indemnity 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 four indicators above average for Erie Indemnity. Sales Growth has a value of 77, which means that, currently, professionals expect the company to grow more than 77% of its competitors. The same is valid for Profit Growth with a value of 58 and for Capital Growth with 75. In addition, Stock Returns had an above-average rank value of 92, which means they have been higher than 92% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 99, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Erie Indemnity exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Erie Indemnity Debt Financing Safety above-average
| SAFETY METRICS | July 18, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 100 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 24 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 1 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 52 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 52 (better than 52% compared with alternatives), the company Erie Indemnity 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 Erie Indemnity 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 Erie Indemnity and the other two below average. Leverage is at a rank of 100 meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors.Refinancing is at a rank of 24, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 76% of its competitors. Liquidity is at a rank of 1, meaning that the company generates less profit to service its debt than 99% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 52 (better than 52% compared with alternatives), Erie Indemnity 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 Erie Indemnity are on the safer side. ...read more
Combined financial peformance: Erie Indemnity Above-Average Financial Performance
| COMBINED PERFORMANCE | July 18, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 10 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 99 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 1 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 62 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 62 (better than 62% compared with investment alternatives), Erie Indemnity (Property & Casualty Insurance, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Erie Indemnity are low in value (priced high) with a consolidated Value Rank of 10 (worse than 90% of alternatives). But they show above-average growth (Growth Rank of 99) and are safely financed (Safety Rank of 52, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 62, is a buy recommendation based on Erie Indemnity's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Erie Indemnity exhibits low value (Obermatt Value Rank of 10), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 99). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 52) 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
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.