May 11, 2023
Top 10 Stock NIB 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: NIB – Top 10 Stock in Australian Securities Exchange Index ASX 100
NIB is listed as a top 10 stock on May 11, 2023 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 growing above average, and 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° Rank of 82 (top 82% performer), Obermatt assesses an overall strong buy recommendation for NIB on May 11, 2023.
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° Assessment NIB Strong Buy
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 42 |
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| GROWTH | ||||||||
| GROWTH | 71 |
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| SAFETY | ||||||||
| SAFETY | 20 |
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| SENTIMENT | ||||||||
| SENTIMENT | 77 |
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| 360° VIEW | ||||||||
| 360° VIEW | 82 |
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ANALYSIS: With an Obermatt 360° Rank of 82 (better than 82% compared with alternatives) for 2022, overall professional sentiment and engagement for the stock NIB are very positive. The 360° Rank is based on consolidating four consolidated indicators, with half of the metrics below and half above average for NIB. The consolidated Growth Rank has a good rank of 71, 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 71% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 77, which means that professional investors are more optimistic about the stock than for 77% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 42, which means that the share price of NIB is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 58% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 20, which means that the company has a financing structure that is riskier than 80% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a 360° Rank of 82, NIB is better than 82% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 71), and professional market sentiment is positive (Sentiment Rank of 77), but value and safety are below average. The Safety Rank is the least important of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. 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 do you sacrifice value for growth? You can use the following rule of thumb: If you take one minus the growth rank, that is the minimum level that the value rank should have. 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 (even though it is lower than 50). Sometimes market sentiment just extrapolates the past, but sometimes they are right. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for NIB very positive
ANALYSIS: With an Obermatt Sentiment Rank of 77 (better than 77% compared with alternatives) for 2022, overall professional sentiment and engagement for the stock NIB is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for NIB. Analyst Opinions are at a rank of 42 (worse than 58% 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 69, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in NIB. Even better, the Professional Investors rank is 80, meaning that professional investors hold more stock in this company than in 80% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 79, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 79% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 77 (more positive than 77% compared with investment alternatives), NIB 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: NIB Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 42 (worse than 58% compared with alternatives), NIB shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where the majority of metrics are below, and only one is above average for NIB. Price-to-Sales (P/S) has a value of 72, which means that the stock price compared with what market professionals expect for future sales is lower than 72% of comparable companies, indicating a good value concerning to NIB's revenue size. But all other performance indicators point in a different direction. Dividend yields have an Obermatt Dividend Yield rank of 42, meaning that dividends are expected to be lower than 58% of comparable investments. Furthermore, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 82% of alternatives (only 18% of peers have an even higher ratio). The same is valid for Price-to-Profit (or Price / Earnings, P/E), which is higher than 66% 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 42, is a HOLD recommendation based on NIB's stock price compared with the company's operational size and dividend yields. Since Price-to-Sales is a stable value indicator even in challenging times, investing in NIB could be seen as a value investment. However, there must be a good reason for the low market-to-book rank. If the company has a typical capital investment practice, the stock may be overvalued because the profit and dividend-related performance indicators are also low. The stock is only good value if investors can expect profits and dividends to pick up in the future. In other cases, NIB looks like an expensive investment today. ...read more
Growth Strategy: NIB Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 71 (better than 71% compared with alternatives), NIB 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 half of the indicators below and half above average for NIB. Profit Growth has a rank of 81, which means that currently professionals expect the company to grow its profits more than 81% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 73 (above 73% of alternative investments). But Sales Growth has a below the median rank of 48, which means that, currently, professionals expect the company to grow less than 52% of its competitors, and Capital Growth also has a lower rank of 36. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 71, is a BUY 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 NIB. ...read more
Safety Strategy: NIB Debt Financing Safety risky
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 60 |
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| REFINANCING | ||||||||
| REFINANCING | 54 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 86 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 20 |
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ANALYSIS: With an Obermatt Safety Rank of 20 (better than 20% compared with alternatives), the company NIB 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 NIB 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, where all three are above average for NIB. Leverage is at 60, meaning the company has a below-average debt-to-equity ratio. It has less debt than 60% of its competitors. Refinancing is at a rank of 54, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 54% of its competitors. Finally, Liquidity is also good at a rank of 86, which means that the company generates more profit to service its debt than 86% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 20 (worse than 80% compared with alternatives), NIB has a financing structure that is significantly riskier 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: NIB Below-Average Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 42 |
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| GROWTH | ||||||||
| GROWTH | 71 |
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| SAFETY | ||||||||
| SAFETY | 86 |
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| COMBINED | ||||||||
| COMBINED | 36 |
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ANALYSIS: With an Obermatt Combined Rank of 36 (worse than 64% compared with investment alternatives), NIB (Life & Health Insurance, Australia) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of NIB are low in value (priced high) with a consolidated Obermatt Value Rank of 42 (worse than 58% of alternatives), and are riskily financed (Safety Rank of 20, which means above-average debt burdens) but show above-average growth (Growth Rank of 71). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 36, is a hold recommendation based on NIB's financial characteristics. As the company NIB shows low value with an Obermatt Value Rank of 42 (58% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 71% of comparable companies (Obermatt Growth Rank is 71). This is a typical case. Companies with above average growth tend to cost more than the sluggish variety. If this is a high-growth company, the low Obermatt Safety Rank of 20 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for NIB, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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