March 21, 2024
Top 10 Stock Hermes 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: Hermes – Top 10 Stock in Cotation Assistée en Continu Index CAC 40
Hermes is listed as a top 10 stock on March 21, 2024 in the market index CAC 40 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 62 (high 62% performer), Obermatt assesses an overall buy recommendation for Hermes on March 21, 2024.
Snapshot: Obermatt Ranks
| Country | France |
| Industry | Apparel, Accessories, Luxury |
| Index | CAC 40, CAC All, SBF 120, Diversity Europe, Renewables Users |
| 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 Hermes Buy
| 360 METRICS | March 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 1 |
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| GROWTH | ||||||||
| GROWTH | 83 |
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| SAFETY | ||||||||
| SAFETY | 57 |
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| SENTIMENT | ||||||||
| SENTIMENT | 59 |
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| 360° VIEW | ||||||||
| 360° VIEW | 62 |
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ANALYSIS: With an Obermatt 360° View of 62 (better than 62% compared with alternatives), overall professional sentiment and financial characteristics for the stock Hermes are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Hermes. 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. The consolidated Safety Rank at 57 means that the company has a financing structure that is safer than 57% 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 59, which means that professional investors are more optimistic about the stock than for 59% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 1, meaning that the share price of Hermes is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 99% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 62, Hermes is better positioned than 62% 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 83), a safe financing structure (Safety Rank of 57), and positive professional market sentiment (Sentiment Rank of 59), 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 Hermes compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (83% better than peers). The value rank could be the reverse reflection of that (17%). 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 Hermes positive
ANALYSIS: With an Obermatt Sentiment Rank of 59 (better than 59% compared with alternatives), overall professional sentiment and engagement for the stock Hermes is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Hermes. Analyst Opinions are at a rank of 40 (worse than 60% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 71, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Hermes. More encouragingly, the Professional Investors rank is 63, which means that professional investors hold more stock in this company than in 63% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 43, 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 57% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 59 (more positive than 59% compared with investment alternatives), Hermes has a reputation among professional investors that is above-average compared with that of its competitors. The sentiment signals are mixed for Hermes. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: Hermes Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 1 (worse than 99% compared with alternatives), Hermes 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 Hermes. Price-to-Sales is 1 which means that the stock price compared with what market professionals expect for future profits is higher than 99% of comparable companies, indicating a low value concerning Hermes's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 3, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Hermes. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 11 and Dividend Yield, which is lower than 86% 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 1, is a sell recommendation based on Hermes's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Hermes? 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 Hermes? 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. Hermes 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: Hermes Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 83 (better than 83% compared with alternatives) for 2024, Hermes 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 Hermes. Sales Growth has a rank of 88 which means that currently, professionals expect the company to grow more than 88% of its competitors. Both Profit Growth, with a rank of 56, and Stock Returns, with a rank of 87, are also above average. But Capital Growth only has a rank of 30, which means that, currently, professionals expect the company to grow its invested capital less than 70% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 83, is a buy recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: Hermes Debt Financing Safety above-average
| SAFETY METRICS | March 21, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 79 |
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| REFINANCING | ||||||||
| REFINANCING | 15 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 89 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 57 |
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ANALYSIS: With an Obermatt Safety Rank of 57 (better than 57% compared with alternatives), the company Hermes 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 Hermes 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 two out of three indicators above average for Hermes. Leverage is at a rank of 79, meaning the company has a below-average debt-to-equity ratio. It has less debt than 79% of its competitors. Liquidity is also good at a rank of 89, meaning the company generates more profit to service its debt than 89% 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 15, 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 85% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 57 (better than 57% compared with alternatives), Hermes has a financing structure that is safer 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 Hermes. 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: Hermes Below-Average Financial Performance
| COMBINED PERFORMANCE | March 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 1 |
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| GROWTH | ||||||||
| GROWTH | 83 |
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| SAFETY | ||||||||
| SAFETY | 89 |
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| COMBINED | ||||||||
| COMBINED | 42 |
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ANALYSIS: With an Obermatt Combined Rank of 42 (worse than 58% compared with investment alternatives), Hermes (Apparel, Accessories, Luxury, France) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Hermes are low in value (priced high) with a consolidated Value Rank of 1 (worse than 99% of alternatives). But they show above-average growth (Growth Rank of 83) and are safely financed (Safety Rank of 57, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 42, is a hold recommendation based on Hermes's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Hermes exhibits low value (Obermatt Value Rank of 1), 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 57) 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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