Fact based stock research
Formosa Chemicals & Fibre (TSEC:1326)

TW0001326007

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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.

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Formosa Chemicals & Fibre stock research in summary

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ANALYSIS: With an Obermatt Combined Rank of 4 (worse than 96% compared with investment alternatives), Formosa Chemicals & Fibre (Commodity Chemicals, Taiwan) shares have lower financial characteristics compared with similar stocks. Shares of Formosa Chemicals & Fibre are low in value (priced high) with a consolidated Value Rank of 21 (worse than 79% of alternatives), show below-average growth (Growth Rank of 13), and are riskily financed (Safety Rank of 26), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 4, is a sell recommendation based on Formosa Chemicals & Fibre's financial characteristics. As the company Formosa Chemicals & Fibre's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 21), low growth (Obermatt Growth Rank of 13), and risky financing practices (Obermatt Safety Rank of 26), 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. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	21
Growth Rank	13
Safety Rank	26
Combined Rank	4

Country	Taiwan
Industry	Commodity Chemicals
Index	Human Rights, FTSE Taiwan
Size class	XX-Large

2-May-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Formosa Chemicals & Fibre

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	98	19	21	21
GROWTH
GROWTH	70	3	69	13
SAFETY
SAFETY	100	34	20	26
SENTIMENT
SENTIMENT	n/a	1	43	^new
360° VIEW
360° VIEW	n/a	1	30	^new

Most recent update of the stock research: 2-May-2024. Financial reporting date used for calculating ranks: 31-Dec-2023. Stock research history is based on the Obermatt Method. The higher the rank, the better Formosa Chemicals & Fibre is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	98	19	21	21
GROWTH
GROWTH	70	3	69	13
SAFETY
SAFETY	100	34	20	26
COMBINED
COMBINED	100	1	28	4

Last update of combined financial performance: 2-May-2024. Stock analysis on combined financial performance: The higher the rank of Formosa Chemicals & Fibre the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 21 (worse than 79% compared with alternatives), Formosa Chemicals & Fibre 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 Formosa Chemicals & Fibre. Price-to-Sales is 26 which means that the stock price compared with what market professionals expect for future profits is higher than 74% of comparable companies, indicating a low value concerning Formosa Chemicals & Fibre's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 42, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Formosa Chemicals & Fibre. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 12 and Dividend Yield, which is lower than 52% 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 21, is a sell recommendation based on Formosa Chemicals & Fibre's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Formosa Chemicals & Fibre? 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 Formosa Chemicals & Fibre? 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. Formosa Chemicals & Fibre 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. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	67	25	25	26
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	84	21	13	12
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	92	38	38	42
DIVIDEND YIELD
DIVIDEND YIELD	88	27	36	48
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	98	19	21	21

Last update of Value Rank: 2-May-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Formosa Chemicals & Fibre; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 13 (better than 13% compared with alternatives), Formosa Chemicals & Fibre shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, where half of the indicators are below and half above average for Formosa Chemicals & Fibre. Profit Growth, with a rank of 54 (better than 54% of its competitors), and Capital Growth, with a rank of 54, are both positive, which is a healthy sign for positive development. But Sales Growth has only a rank of 8, which means that, currently, professionals expect the company to grow less than 92% of its competitors, and Stock Returns are at a rank of 23. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 13, is a sell recommendation for growth and momentum investors. Stock returns that are a thing of the past can be less of a problem. Below-average revenue growth may be caused by divestments of underperforming businesses. If that is the case, then the positive developments of profit and capital growth are signs of a company with growth potential. If these are the reasons, overall growth is well on track to making this stock attractive for growth investors. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	70	4	41	8
PROFIT GROWTH
PROFIT GROWTH	29	12	82	54
CAPITAL GROWTH
CAPITAL GROWTH	n/a	52	98	54
STOCK RETURNS
STOCK RETURNS	46	33	19	23
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	70	3	69	13

Last update of Growth Rank: 2-May-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Formosa Chemicals & Fibre.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 26 (better than 26% compared with alternatives), the company Formosa Chemicals & Fibre 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 Formosa Chemicals & Fibre 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 just one indicator above average for Formosa Chemicals & Fibre and the other two below average. Leverage is at a rank of 55 meaning the company has a below-average debt-to-equity ratio. It has less debt than 55% of its competitors.Refinancing is at a rank of 40, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 60% of its competitors. Liquidity is at a rank of 14, meaning that the company generates less profit to service its debt than 86% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 26 (worse than 74% compared with alternatives), Formosa Chemicals & Fibre has a financing structure that is riskier 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 Formosa Chemicals & Fibre are on the safer side. Investors may have a short-term debt challenge and liquidity issues with Formosa Chemicals & Fibre and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	74	60	54	55
REFINANCING
REFINANCING	80	49	35	40
LIQUIDITY
LIQUIDITY	100	28	12	14
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	100	34	20	26

Last update of Safety Rank: 2-May-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Formosa Chemicals & Fibre and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	3	2	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	4	60	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	39	25	^new
MARKET PULSE
MARKET PULSE	n/a	15	89	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	1	43	^new

Last update of Sentiment Rank: 2-May-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Formosa Chemicals & Fibre.
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