Fact based stock research
Formosa Plastics (TSEC:1301)

TW0001301000

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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.

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Formosa Plastics stock research in summary

fpc.com.tw

ANALYSIS: With an Obermatt Combined Rank of 11 (worse than 89% compared with investment alternatives), Formosa Plastics (Commodity Chemicals, Taiwan) shares have lower financial characteristics compared with similar stocks. Shares of Formosa Plastics are low in value (priced high) with a consolidated Value Rank of 15 (worse than 85% of alternatives), show below-average growth (Growth Rank of 25), and are riskily financed (Safety Rank of 32), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 11, is a sell recommendation based on Formosa Plastics's financial characteristics. As the company Formosa Plastics's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 15), low growth (Obermatt Growth Rank of 25), and risky financing practices (Obermatt Safety Rank of 32), 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	15
Growth Rank	25
Safety Rank	32
Combined Rank	11

Country	Taiwan
Industry	Commodity Chemicals
Index	Low Emissions, FTSE Taiwan
Size class	X-Large

14-Nov-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 Plastics

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	74	39	19	15
GROWTH
GROWTH	81	7	63	25
SAFETY
SAFETY	84	45	61	32
SENTIMENT
SENTIMENT	n/a	55	10	^new
360° VIEW
360° VIEW	n/a	13	30	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Formosa Plastics is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	74	39	19	15
GROWTH
GROWTH	81	7	63	25
SAFETY
SAFETY	84	45	61	32
COMBINED
COMBINED	98	7	53	11

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of Formosa Plastics the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 15 (worse than 85% compared with alternatives), Formosa Plastics 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 Plastics. Price-to-Sales is 18 which means that the stock price compared with what market professionals expect for future profits is higher than 82% of comparable companies, indicating a low value concerning Formosa Plastics's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 37, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Formosa Plastics. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 14 and Dividend Yield, which is lower than 63% 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 15, is a sell recommendation based on Formosa Plastics's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Formosa Plastics? 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 Plastics? 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 Plastics 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)	37	12	9	18
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	82	38	28	14
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	72	27	26	37
DIVIDEND YIELD
DIVIDEND YIELD	76	98	48	37
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	74	39	19	15

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Formosa Plastics; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 25 (better than 25% compared with alternatives), Formosa Plastics shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Formosa Plastics. Only Capital Growth has a good rank of 85, which means that currently professionals expect the company to grow its invested capital more than 22% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 13 which means that currently professionals expect the company to grow less than 87% of its competitors. Profit Growth with a rank of 22 and Stock Returns with a rank of 9 are also low (below 91% of alternative investments). ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 25, is a hold recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Formosa Plastics is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. 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 limited here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	70	11	69	13
PROFIT GROWTH
PROFIT GROWTH	92	9	23	22
CAPITAL GROWTH
CAPITAL GROWTH	n/a	37	88	85
STOCK RETURNS
STOCK RETURNS	54	57	29	9
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	81	7	63	25

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Formosa Plastics.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 32 (better than 32% compared with alternatives), the company Formosa Plastics 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 Plastics 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 Plastics and the other two below average. Leverage is at a rank of 68 meaning the company has a below-average debt-to-equity ratio. It has less debt than 68% of its competitors.Refinancing is at a rank of 19, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 81% of its competitors. Liquidity is at a rank of 13, meaning that the company generates less profit to service its debt than 87% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 32 (worse than 68% compared with alternatives), Formosa Plastics 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 Plastics are on the safer side. Investors may have a short-term debt challenge and liquidity issues with Formosa Plastics 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	68	72	68
REFINANCING
REFINANCING	32	33	21	19
LIQUIDITY
LIQUIDITY	100	41	65	13
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	84	45	61	32

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Formosa Plastics 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	93	21	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	6	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	86	21	^new
MARKET PULSE
MARKET PULSE	n/a	9	7	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	55	10	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Formosa Plastics.
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