August 29, 2024
Top 10 Stock ITC 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: ITC – Top 10 Stock in Low Waste Leaders
ITC is listed as a top 10 stock on August 29, 2024 in the market index Low Waste because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 63 (high 63% performer), Obermatt assesses an overall buy recommendation for ITC on August 29, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Tobacco |
| Index | BSE Sensex, Low Emissions, Energy Efficient, Human Rights, Independent Boards Growth Markets, Low Waste, Recycling, CNX Nifty 50 |
| Size class | X-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 ITC Buy
| 360 METRICS | August 29, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 19 |
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| GROWTH | ||||||||
| GROWTH | 63 |
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| SAFETY | ||||||||
| SAFETY | 92 |
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| SENTIMENT | ||||||||
| SENTIMENT | 37 |
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| 360° VIEW | ||||||||
| 360° VIEW | 63 |
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ANALYSIS: With an Obermatt 360° View of 63 (better than 63% compared with alternatives), overall professional sentiment and financial characteristics for the stock ITC are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for ITC. The consolidated Growth Rank has a good rank of 63, 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 63% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 92 which means that the company has a financing structure that is safer than 92% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 19 which means that the share price of ITC is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 81% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 37, which means that professional investors are more pessimistic about the stock than for 63% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 63, ITC is better positioned than 63% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 63), and the company is safely financed (Safety Rank of 92). However, professional market sentiment is low(Sentiment Rank of 37). The negative market view on ITC may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because 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 ITC compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth 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 value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for ITC only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 37 (better than 37% compared with alternatives), overall professional sentiment and engagement for the stock ITC is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and the other half above average for ITC. Analyst Opinions are at a rank of 69 (better than 69% 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 86 which means that currently, professional investors hold more stock in this company than in 86% of alternative investment opportunities. But Analyst Opinions Change has a rank of 29, 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 ITC. Furthermore, Market Pulse has a rank of 7, 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 93% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 37 (less encouraging than 63% compared with investment alternatives), ITC has a reputation among professional investors that is below 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: ITC Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 19 (worse than 81% compared with alternatives), ITC 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 ITC. Price-to-Sales is 5 which means that the stock price compared with what market professionals expect for future profits is higher than 95% of comparable companies, indicating a low value concerning ITC's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 20, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of ITC. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 19 and Dividend Yield, which is lower than 53% 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 19, is a sell recommendation based on ITC's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for ITC? 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 ITC? 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. ITC 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: ITC Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 63 (better than 63% compared with alternatives), ITC shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for ITC. Sales Growth has a rank of 81 which means that currently, professionals expect the company to grow more than 81% of its competitors. Capital Growth is also above 33% of competitors with a rank of 54, and Stock Returns with the rank of 69 is also an outperformance. Only Profit Growth is low with a rank of 33 which means that currently, professionals expect the company to grow its profits less than 67% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 63, is a buy recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, ITC is a good growth stock. ...read more
Safety Strategy: ITC Debt Financing Safety very solid
| SAFETY METRICS | August 29, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 97 |
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| REFINANCING | ||||||||
| REFINANCING | 36 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 100 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 92 |
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ANALYSIS: With an Obermatt Safety Rank of 92 (better than 92% compared with alternatives) for 2024, the company ITC has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of ITC 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 ITC. Leverage is at a rank of 97, meaning the company has a below-average debt-to-equity ratio. It has less debt than 97% of its competitors. Liquidity is also good at a rank of 100, meaning the company generates more profit to service its debt than 100% 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 36, 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 64% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 92 (better than 92% compared with alternatives), ITC has a financing structure that is significantly 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 ITC. 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: ITC Above-Average Financial Performance
| COMBINED PERFORMANCE | August 29, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 19 |
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| GROWTH | ||||||||
| GROWTH | 63 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| COMBINED | ||||||||
| COMBINED | 71 |
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ANALYSIS: With an Obermatt Combined Rank of 71 (better than 71% compared with investment alternatives), ITC (Tobacco, India) shares have above-average financial characteristics compared with similar stocks. Shares of ITC are low in value (priced high) with a consolidated Value Rank of 19 (worse than 81% of alternatives). But they show above-average growth (Growth Rank of 63) and are safely financed (Safety Rank of 92, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 71, is a buy recommendation based on ITC's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company ITC exhibits low value (Obermatt Value Rank of 19), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 63). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 92) 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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