August 1, 2024
Top 10 Stock Medibank Private Strong 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: Medibank Private – Top 10 Stock in Australian Securities Exchange Index ASX 100
Medibank Private is listed as a top 10 stock on August 01, 2024 in the market index ASX 100 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 87 (top 87% performer), Obermatt assesses an overall strong buy recommendation for Medibank Private on August 01, 2024.
Snapshot: Obermatt Ranks
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 Medibank Private Strong Buy
| 360 METRICS | August 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 46 |
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| GROWTH | ||||||||
| GROWTH | 47 |
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| SAFETY | ||||||||
| SAFETY | 54 |
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| SENTIMENT | ||||||||
| SENTIMENT | 90 |
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| 360° VIEW | ||||||||
| 360° VIEW | 87 |
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ANALYSIS: With an Obermatt 360° View of 87 (better than 87% compared with alternatives) for 2022, overall professional sentiment and financial characteristics for the stock Medibank Private are very positive. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Medibank Private. The consolidated Sentiment Rank has a good rank of 90, which means that professional investors are more optimistic about the stock than for 90% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 54 or better than 54% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 46, meaning that the share price of Medibank Private is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 47. ...read more
RECOMMENDATION: With a consolidated 360° View of 87, Medibank Private is better positioned than 87% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 90) and safe financing practices (Safety Rank of 54), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of Medibank Privatẹ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Medibank Private very positive
ANALYSIS: With an Obermatt Sentiment Rank of 90 (better than 90% compared with alternatives) for 2022, overall professional sentiment and engagement for the stock Medibank Private is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Medibank Private. Analyst Opinions are at a rank of 39 (worse than 61% 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 66, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Medibank Private. Even better, the Professional Investors rank is 66, meaning that professional investors hold more stock in this company than in 66% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 91, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 91% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 90 (more positive than 90% compared with investment alternatives), Medibank Private has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Medibank Private Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 46 (worse than 54% compared with alternatives), Medibank Private shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Medibank Private. Price-to-Sales (P/S) is 68, which means that the stock price compared with what market professionals expect for future sales is lower than for 68% of comparable companies, indicating a good value concerning Medibank Private's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 66, which means that dividends are expected to be higher than for 66% of comparable investments. On the other hand, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is less favorable than for 93% of alternatives (only 7% of peers have an even higher ratio). The same is valid for the Price-to-Profit (or Price / Earnings, P/E) ratio, which is higher than for 65% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 46, is a hold recommendation based on Medibank Private's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. ...read more
Growth Strategy: Medibank Private Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 47 (better than 47% compared with alternatives), Medibank Private 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 half of the indicators below and half above average for Medibank Private. Profit Growth has a rank of 64, which means that currently professionals expect the company to grow its profits more than 64% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 55 (above 55% of alternative investments). But Sales Growth has a below the median rank of 30, which means that, currently, professionals expect the company to grow less than 70% of its competitors, and Capital Growth also has a lower rank of 22. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 47, is a hold recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Medibank Private. ...read more
Safety Strategy: Medibank Private Debt Financing Safety above-average
| SAFETY METRICS | August 1, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 100 |
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| REFINANCING | ||||||||
| REFINANCING | 50 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 89 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 54 |
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ANALYSIS: With an Obermatt Safety Rank of 54 (better than 54% compared with alternatives), the company Medibank Private 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 Medibank Private 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, where all three are above average for Medibank Private. Leverage is at 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors. Refinancing is at a rank of 50, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 50% of its competitors. Finally, Liquidity is also good at a rank of 89, which means that the company generates more profit to service its debt than 89% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 54 (better than 54% compared with alternatives), Medibank Private has a financing structure that is safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Medibank Private Above-Average Financial Performance
| COMBINED PERFORMANCE | August 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 46 |
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| GROWTH | ||||||||
| GROWTH | 47 |
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| SAFETY | ||||||||
| SAFETY | 89 |
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| COMBINED | ||||||||
| COMBINED | 66 |
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ANALYSIS: With an Obermatt Combined Rank of 66 (better than 66% compared with investment alternatives), Medibank Private (Life & Health Insurance, Australia) shares have above-average financial characteristics compared with similar stocks. Shares of Medibank Private are low in value (priced high) with a consolidated Value Rank of 46 (worse than 54% of alternatives) and show below-average growth (Growth Rank of 47) but are safely financed (Safety Rank of 54), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 66, is a buy recommendation based on Medibank Private's financial characteristics. As the company Medibank Private's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 46) and low growth (Obermatt Growth Rank of 47), 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. In this case, good financing practices (Obermatt Safety Rank of 54) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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