May 2, 2024
Top 10 Stock Micro Focus Sell 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: Micro Focus – Top 10 Stock in FTSE 250 Index
Micro Focus is listed as a top 10 stock on May 02, 2024 in the market index FTSE 250 because of its high performance in at least one of the Obermatt investment strategies. Only the Obermatt Value Rank exhibits above-average performance, which means that the stock is seen as critical by the professional community and other financial facts are below average, conveying mixed investment signals. Based on the Obermatt 360° View of 20 (20% performer), Obermatt issues an overall sell recommendation for Micro Focus on May 02, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Application Software |
| Index | FTSE All Shares, FTSE 250, FTSE 350, Artificial Intelligence, Dividends Europe, Renewables Users |
| Size class | 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 Micro Focus Sell
| 360 METRICS | May 2, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 92 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 21 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 4 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 8 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 20 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 20 (better than 20% compared with alternatives), overall professional sentiment and financial characteristics for the stock Micro Focus are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Micro Focus. Only the consolidated Value Rank has an attractive rank of 92, which means that the share price of Micro Focus is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 92% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 21, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The consolidated Safety Rank has a riskier rank of 4, meaning the company has a riskier financing structure than 96% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, professionals are more pessimistic about the stock than for 92% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 8. ...read more
RECOMMENDATION: With a consolidated 360° View of 20, Micro Focus is worse than 80% of all alternative stock investment opportunities based on the Obermatt Method. This means that Micro Focus shares are on the riskier side for investors. Only one of the consolidated Obermatt Ranks exhibits above-average performance, namely the Value Rank at a level of 92. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 21), a riskier financing structure than the competition (Safety Rank of 4), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 8) is negative. This combination is sensitive to a crisis, because high debt levels (low safety) require growth to finance the debt burden. It’s no wonder that the investor community indicators are skeptical (low sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. We recommend evaluating whether the future of Micro Focus is as challenging as the low price of the stock suggests. Since the professional community is pessimistic, you might need to worry about the future of Micro Focus. Only invest if you have solid reasons to believe that the low growth is temporary and the current market sentiment is an overreaction, possibly due to reputational issues in the past. ...read more
Sentiment Strategy: Professional Market Sentiment for Micro Focus negative
ANALYSIS: With an Obermatt Sentiment Rank of 8 (better than 8% compared with alternatives), overall professional sentiment and engagement for the stock Micro Focus is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Micro Focus. Analyst Opinions are at a rank of 1 (worse than 99% 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 50, 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 Micro Focus. More encouragingly, the Professional Investors rank is 55, which means that professional investors hold more stock in this company than in 55% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 13, 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 87% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 8 (less encouraging than 92% compared with investment alternatives), Micro Focus has a reputation among professional investors that is far below that of its competitors. The sentiment signals are mixed for Micro Focus. 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: Micro Focus Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 92 (better than 92% compared with alternatives) for 2023, Micro Focus shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Micro Focus. Price-to-Sales is 89 which means that the stock price compared with what market professionals expect for future sales is lower than for 89% of comparable companies, indicating a good value for Micro Focus's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 100% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 87. Compared with other companies in the same industry, dividend yields of Micro Focus are expected to be higher than for 95% of all competitors (a Dividend Yield rank of 95). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 92, is a buy recommendation based on Micro Focus's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Micro Focus based on its detailed value metrics.
Growth Strategy: Micro Focus Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 21 (better than 21% compared with alternatives), Micro Focus shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Micro Focus. Sales Growth has a below market rank of 21, which means that, currently, professionals expect the company to grow less than 79% of its competitors. The same is valid for Capital Growth, with a rank of 25, and Profit Growth, with a rank of 27. Currently, professionals expect the company to grow its profits less than 73% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 55, which means that the stock returns have recently been above 55% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 21, is a sell recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Micro Focus, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: Micro Focus Debt Financing Safety risky
| SAFETY METRICS | May 2, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 11 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 6 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 19 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 4 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 4 (better than 4% compared with alternatives), the company Micro Focus has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Micro Focus 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 all three metrics below average for Micro Focus. Liquidity is at 19, meaning that the company generates less profit to service its debt than 81% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 11, meaning the company has an above-average debt-to-equity ratio. It has more debt than 89% of its competitors. Finally, Refinancing is at a rank of 6 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 94% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 4 (worse than 96% compared with alternatives), Micro Focus has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing.
Combined financial peformance: Micro Focus Lowest Financial Performance
| COMBINED PERFORMANCE | May 2, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 92 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 21 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 19 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 18 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 18 (worse than 82% compared with investment alternatives), Micro Focus (Application Software, United Kingdom) shares have lower financial characteristics compared with similar stocks. Shares of Micro Focus are a good value (attractively priced) with a consolidated Value Rank of 92 (better than 92% of alternatives) but show below-average growth (Growth Rank of 21), and are riskily financed (Safety Rank of 4), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 18, is a sell recommendation based on Micro Focus's financial characteristics. As the company Micro Focus's key financial metrics exhibit good value (Obermatt Value Rank of 92) but low growth (Obermatt Growth Rank of 21) and risky financing practices (Obermatt Safety Rank of 4), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 92% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.