Fact based stock research
Novatek Microelectronics (TSEC:3034)

TW0003034005

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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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Novatek Microelectronics stock research in summary

novatek.com.tw

ANALYSIS: With an Obermatt Combined Rank of 58 (better than 58% compared with investment alternatives), Novatek Microelectronics (Semiconductors, Taiwan) shares have above-average financial characteristics compared with similar stocks. Shares of Novatek Microelectronics are low in value (priced high) with a consolidated Value Rank of 47 (worse than 53% of alternatives) and show below-average growth (Growth Rank of 21) but are safely financed (Safety Rank of 94), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 58, is a buy recommendation based on Novatek Microelectronics's financial characteristics. As the company Novatek Microelectronics's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 47) and low growth (Obermatt Growth Rank of 21), 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 94) 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. 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	47
Growth Rank	21
Safety Rank	94
Combined Rank	58

Country	Taiwan
Industry	Semiconductors
Index	FTSE Taiwan
Size class	X-Large

This stock has achievements: Top 10 Stock.

19-Dec-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: Novatek Microelectronics

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	85	69	69	47
GROWTH
GROWTH	93	45	65	21
SAFETY
SAFETY	95	95	97	94
SENTIMENT
SENTIMENT	n/a	65	76	^new
360° VIEW
360° VIEW	n/a	91	100	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Novatek Microelectronics is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	85	69	69	47
GROWTH
GROWTH	93	45	65	21
SAFETY
SAFETY	95	95	97	94
COMBINED
COMBINED	100	89	100	58

Last update of combined financial performance: 19-Dec-2024. Stock analysis on combined financial performance: The higher the rank of Novatek Microelectronics the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 47 (worse than 53% compared with alternatives), Novatek Microelectronics shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Novatek Microelectronics. Price-to-Profit (also referred to as price-earnings, P/E) is 71 which means that the stock price compared with what market professionals expect for future profits is lower than for 71% of comparable companies, indicating a good value concerning Novatek Microelectronics's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 21, which means that the stock price is lower as regards to invested capital than for 21% of comparable investments. On the other hand, Price-to-Sales is less favorable than 70% of alternatives (only 30% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 5% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 47, is a hold recommendation based on Novatek Microelectronics's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	64	54	45	30
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	96	84	78	71
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	41	25	22	21
DIVIDEND YIELD
DIVIDEND YIELD	96	93	100	95
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	85	69	69	47

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Novatek Microelectronics; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 21 (better than 21% compared with alternatives), Novatek Microelectronics 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 Novatek Microelectronics. Sales Growth has a below market rank of 34, which means that, currently, professionals expect the company to grow less than 66% of its competitors. The same is valid for Capital Growth, with a rank of 31, and Profit Growth, with a rank of 25. Currently, professionals expect the company to grow its profits less than 75% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 65, which means that the stock returns have recently been above 65% 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 Novatek Microelectronics, 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. 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, especially since the growth performance is low here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	85	19	26	34
PROFIT GROWTH
PROFIT GROWTH	25	86	64	25
CAPITAL GROWTH
CAPITAL GROWTH	n/a	27	46	31
STOCK RETURNS
STOCK RETURNS	69	63	77	65
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	93	45	65	21

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Novatek Microelectronics.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 94 (better than 94% compared with alternatives) for 2024, the company Novatek Microelectronics has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Novatek Microelectronics 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 Novatek Microelectronics. Leverage is at a rank of 96, meaning the company has a below-average debt-to-equity ratio. It has less debt than 96% 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 37, 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 63% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 94 (better than 94% compared with alternatives), Novatek Microelectronics 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 Novatek Microelectronics. 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. Investors may have a short-term debt challenge with Novatek Microelectronics 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	86	92	94	96
REFINANCING
REFINANCING	49	47	47	37
LIQUIDITY
LIQUIDITY	100	97	99	100
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	95	95	97	94

Last update of Safety Rank: 19-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Novatek Microelectronics 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	46	40	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	95	53	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	33	77	^new
MARKET PULSE
MARKET PULSE	n/a	56	73	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	65	76	^new

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Novatek Microelectronics.
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