October 31, 2024
Top 10 Stock Leonardo 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: Leonardo – Top 10 Stock in Milano Italia Borsa Index MIB
Leonardo is listed as a top 10 stock on October 31, 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. The company is growing above average and 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 78 (top 78% performer), Obermatt assesses an overall strong buy recommendation for Leonardo on October 31, 2024.
Snapshot: Obermatt Ranks
| Country | Italy |
| Industry | Aerospace & Defense |
| Index | MIB, Human Rights |
| 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 Leonardo Strong Buy
| 360 METRICS | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 43 |
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| GROWTH | ||||||||
| GROWTH | 80 |
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| SAFETY | ||||||||
| SAFETY | 41 |
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| SENTIMENT | ||||||||
| SENTIMENT | 79 |
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| 360° VIEW | ||||||||
| 360° VIEW | 78 |
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ANALYSIS: With an Obermatt 360° View of 78 (better than 78% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Leonardo are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Leonardo. 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 Sentiment Rank also has a good rank of 79, which means that professional investors are more optimistic about the stock than for 79% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 43, which means that the share price of Leonardo is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 57% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 41, which means that the company has a financing structure that is riskier than those of 59% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 78, Leonardo is better positioned than 78% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 80), and professional market sentiment is positive (Sentiment Rank of 79), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. 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 do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value 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 growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects 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 Leonardo very positive
ANALYSIS: With an Obermatt Sentiment Rank of 79 (better than 79% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Leonardo is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and the other half above average for Leonardo. Analyst Opinions are at a rank of 81 (better than 81% of alternative investments). Currently, stock research analysts tend to recommend a stock investment in the company. There are also many institutional investors invested in the stock, represented by a Professional Investors rank of 91 which means that currently, professional investors hold more stock in this company than in 91% of alternative investment opportunities. But Analyst Opinions Change has a rank of 32, which means that stock research experts are changing their opinions for the worse in recommending investing in the company. In other words, they are getting more critical of investments in Leonardo. Furthermore, Market Pulse has a rank of 42, 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 58% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 79 (more positive than 79% compared with investment alternatives), Leonardo has a reputation among professional investors that is significantly higher than that of its competitors. Three below-market sentiment indicators are a sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it may be around the corner. ...read more
Value Strategy: Leonardo Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 43 (worse than 57% compared with alternatives), Leonardo shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators where three out of four are below average for Leonardo. Only the Price-to-Book Capital ratio (also referred to as market-to-book ratio) indicates good stock value with a Price-to-Book Rank of 54, which means that the stock price is lower compared with invested capital than for 54% of comparable investments. All other value indicators are below the market median. Price-to-Sales is 39 which means the stock price compared with what market professionals expect for future profits is higher than 61% of comparable companies, indicating a low value concerning Leonardo's revenue levels. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Book Rank of 54 and for the dividend yields rank which is lower than for 70% of comparable companies, making the stock more expensive as regards to with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 43, is a hold recommendation based on Leonardo's stock price compared with the company's operational size and dividend yields. Why are market participants paying such a high price for Leonardo, where three out of four value indicators are below par? One reason could be that the company is well financed, indicated by the high book capital level, and has a promising future that is not yet visible in reported revenues and profits. That would also explain the low dividend yield because the company needs the cash to invest in its future. If investors can verify a picture in this sense, the stock may still be a good investment, even though current company-reported financials don't fully explain current stock prices. ...read more
Growth Strategy: Leonardo Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 80 (better than 80% compared with alternatives) for 2024, Leonardo 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 Leonardo. Profit Growth has a rank of 77 which means that currently professionals expect the company to grow its profits more than 77% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 71, and Stock Returns has a rank of 87 which means that the stock returns have recently been above 87% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 39 (61% 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: Leonardo Debt Financing Safety below-average
| SAFETY METRICS | October 31, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 56 |
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| REFINANCING | ||||||||
| REFINANCING | 12 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 57 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 41 |
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ANALYSIS: With an Obermatt Safety Rank of 41 (better than 41% compared with alternatives), the company Leonardo has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Leonardo is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, 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 Leonardo. Leverage is at a rank of 56, meaning the company has a below-average debt-to-equity ratio. It has less debt than 56% of its competitors. Liquidity is also good at a rank of 57, meaning the company generates more profit to service its debt than 57% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 12, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 88% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 41 (worse than 59% compared with alternatives), Leonardo has a financing structure that is riskier than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Leonardo. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Leonardo Above-Average Financial Performance
| COMBINED PERFORMANCE | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 43 |
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| GROWTH | ||||||||
| GROWTH | 80 |
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| SAFETY | ||||||||
| SAFETY | 57 |
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| COMBINED | ||||||||
| COMBINED | 63 |
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ANALYSIS: With an Obermatt Combined Rank of 63 (better than 63% compared with investment alternatives), Leonardo (Aerospace & Defense, Italy) shares have above-average financial characteristics compared with similar stocks. Shares of Leonardo are low in value (priced high) with a consolidated Value Rank of 43 (worse than 57% of alternatives), and are riskily financed (Safety Rank of 41, which means above-average debt burdens) but show above-average growth (Growth Rank of 80). ...read more
RECOMMENDATION: A Combined Rank of 63, is a buy recommendation based on Leonardo's financial characteristics. As the company Leonardo shows low value with an Obermatt Value Rank of 43 (57% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 80% of comparable companies (Obermatt Growth Rank is 80). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 41 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Leonardo, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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