Fact based stock research
Magazine Luiza (BOVESPA:MGLU3)

BRMGLUACNOR2

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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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Magazine Luiza stock research in summary

magazineluiza.com.br

ANALYSIS: With an Obermatt Combined Rank of 74 (better than 74% compared with investment alternatives), Magazine Luiza (General Merchandise Stores, Brazil) shares have above-average financial characteristics compared with similar stocks. Shares of Magazine Luiza are a good value (attractively priced) with a consolidated Value Rank of 81 (better than 81% of alternatives), show above-average growth (Growth Rank of 53) but are riskily financed (Safety Rank of 41), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 74, is a buy recommendation based on Magazine Luiza's financial characteristics. As the company Magazine Luiza's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 81) and above-average growth (Obermatt Growth Rank of 53), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 41) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. 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	81
Growth Rank	53
Safety Rank	41
Combined Rank	74

Country	Brazil
Industry	General Merchandise Stores
Index	BOVESPA, Renewables Users
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: Magazine Luiza

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	11	27	41	81
GROWTH
GROWTH	2	55	41	53
SAFETY
SAFETY	57	71	36	41
SENTIMENT
SENTIMENT	n/a	9	11	^new
360° VIEW
360° VIEW	n/a	23	12	^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 Magazine Luiza is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	11	27	41	81
GROWTH
GROWTH	2	55	41	53
SAFETY
SAFETY	57	71	36	41
COMBINED
COMBINED	27	43	26	74

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

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 81 (better than 81% compared with alternatives) for 2024, Magazine Luiza shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Magazine Luiza. Price-to-Sales (P/S) is 91, which means that the stock price compared with what market professionals expect for future sales is lower than for 91% of comparable companies, indicating a good value regarding Magazine Luiza's revenue size. The same is valid for expected Price to Profits (or Price / Earnings, P/E), more favorable than for 68% of alternatives, and it's also true for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 100. But, compared with other companies in the same industry, dividend yields are expected to be lower than average; only 25% of all competitors have even lower dividend yields than Magazine Luiza (a Dividend Yield Rank of 25). 75% alternative investments in the same business provide a higher dividend yield. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 81, is a buy recommendation based on Magazine Luiza's stock price compared with the company's operational size and dividend yields. The below-average dividend yield may be a good sign, as it could mean the company has more attractive investment opportunities for the generated cash than to pay it out as dividends. A low dividend yield can also indicate a growth phase. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	36	56	79	91
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	33	6	9	68
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	10	58	80	100
DIVIDEND YIELD
DIVIDEND YIELD	55	7	19	25
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	11	27	41	81

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

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 53 (better than 53% compared with alternatives), Magazine Luiza 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 Magazine Luiza. Sales Growth has a value of 50 which means that currently professionals expect the company to grow more than 50% of its competitors. Profit Growth with a value of 94 and Capital Growth with a rank of 67 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 3, which means that stock returns have recently been below 97% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 53, is a buy recommendation for growth and momentum investors. Magazine Luiza has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for Magazine Luiza, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. 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. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	24	59	51	50
PROFIT GROWTH
PROFIT GROWTH	n/a	55	27	94
CAPITAL GROWTH
CAPITAL GROWTH	n/a	98	82	67
STOCK RETURNS
STOCK RETURNS	1	1	25	3
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	2	55	41	53

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

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 41 (better than 41% compared with alternatives), the company Magazine Luiza 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 Magazine Luiza 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 Magazine Luiza and the other two below average. Refinancing is at 92, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 92% of its competitors. But Leverage is high with a rank of 40, meaning the company has an above-average debt-to-equity ratio. It has more debt than 60% of its competitors. Liquidity is also on the riskier side with a rank of 6, meaning the company generates less profit to service its debt than 94% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 41 (worse than 59% compared with alternatives), Magazine Luiza has a financing structure that is riskier than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for Magazine Luiza are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. In the long-term, investors may have a debt challenge with Magazine Luiza 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	67	74	42	40
REFINANCING
REFINANCING	60	73	73	92
LIQUIDITY
LIQUIDITY	31	47	6	6
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	57	71	36	41

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Magazine Luiza 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	48	23	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	87	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	31	14	^new
MARKET PULSE
MARKET PULSE	n/a	6	8	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	9	11	^new

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