May 11, 2023
Top 10 Stock Qantas Airways 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: Qantas Airways – Top 10 Stock in Australian Securities Exchange Index ASX 100
Qantas Airways 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 62 (high 62% performer), Obermatt assesses an overall buy recommendation for Qantas Airways 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 Qantas Airways Buy
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 36 |
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| GROWTH | ||||||||
| GROWTH | 95 |
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| SAFETY | ||||||||
| SAFETY | 1 |
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| SENTIMENT | ||||||||
| SENTIMENT | 88 |
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| 360° VIEW | ||||||||
| 360° VIEW | 62 |
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ANALYSIS: With an Obermatt 360° Rank of 62 (better than 62% compared with alternatives), overall professional sentiment and engagement for the stock Qantas Airways are above average. The 360° Rank is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Qantas Airways. The consolidated Growth Rank has a good rank of 95, 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 95% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 88, which means that professional investors are more optimistic about the stock than for 88% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 36, which means that the share price of Qantas Airways 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 64% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 1, which means that the company has a financing structure that is riskier than 99% 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 62, Qantas Airways is better than 62% 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 95), and professional market sentiment is positive (Sentiment Rank of 88), 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 Qantas Airways very positive
ANALYSIS: With an Obermatt Sentiment Rank of 88 (better than 88% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Qantas Airways is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Qantas Airways. Analyst Opinions are at a rank of 89 (better than 89% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 64, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Qantas Airways. The Professional Investors rank is 58, which means that currently, professional investors hold more stock in this company than in 58% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 61 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 61% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 88 (more positive than 88% compared with investment alternatives), Qantas Airways has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Qantas Airways stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: Qantas Airways Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 36 (worse than 64% compared with alternatives), Qantas Airways 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 are above average for Qantas Airways. Price-to-Sales (P/S) has a value of 88, which means that the stock price compared with what market professionals expect for future sales is lower than 88% of comparable companies, indicating a good value concerning Qantas Airways's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than 97% of alternatives. Finally, it is true for expected dividend yields with an Obermatt Dividend Yield rank of 1 (dividends are expected to be higher than 1% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 99% of all competitors have an even higher price compared with book capital which puts the Obermatt Price-to-Capital Rank for Qantas Airways to 1. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 36, is a HOLD recommendation based on Qantas Airways's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner on assets than its competitors. For instance, the company could be leasing its production facilities, or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the low Dividend Yield is also explained as such companies tend to invest their income into market development. The other good value ranks for Sales and Profits are encouraging indicators for the stock price value. ...read more
Growth Strategy: Qantas Airways Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 95 (better than 95% compared with alternatives) for 2023, Qantas Airways shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for Qantas Airways. Sales Growth has a value of 61, which means that, currently, professionals expect the company to grow more than 61% of its competitors. The same is valid for Profit Growth with a value of 94 and for Capital Growth with 65. In addition, Stock Returns had an above-average rank value of 81, which means they have been higher than 81% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 95, is a BUY recommendation for growth and momentum investors. Since all Growth Ranks are positive, Qantas Airways exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future, or if the current performance is only a temporary recovery from a very low point in the company's history, such as a turn-around. In the case of a turn-around situation, the current performance is a positive indicator that the company is on the right track. ...read more
Safety Strategy: Qantas Airways Debt Financing Safety risky
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 1 |
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| REFINANCING | ||||||||
| REFINANCING | 4 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 8 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 1 |
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ANALYSIS: With an Obermatt Safety Rank of 1 (better than 1% compared with alternatives), the company Qantas Airways 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 Qantas Airways 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 Qantas Airways. Liquidity is at 8, meaning that the company generates less profit to service its debt than 92% 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 1, meaning the company has an above-average debt-to-equity ratio. It has more debt than 99% of its competitors. Finally, Refinancing is at a rank of 4 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 96% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 1 (worse than 99% compared with alternatives), Qantas Airways 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. ...read more
Combined financial peformance: Qantas Airways Below-Average Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 36 |
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| GROWTH | ||||||||
| GROWTH | 95 |
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| SAFETY | ||||||||
| SAFETY | 8 |
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| COMBINED | ||||||||
| COMBINED | 28 |
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ANALYSIS: With an Obermatt Combined Rank of 28 (worse than 72% compared with investment alternatives), Qantas Airways (Airlines, Australia) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Qantas Airways are low in value (priced high) with a consolidated Obermatt Value Rank of 36 (worse than 64% of alternatives), and are riskily financed (Safety Rank of 1, which means above-average debt burdens) but show above-average growth (Growth Rank of 95). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 28, is a hold recommendation based on Qantas Airways's financial characteristics. As the company Qantas Airways shows low value with an Obermatt Value Rank of 36 (64% 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 95% of comparable companies (Obermatt Growth Rank is 95). 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 1 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 Qantas Airways, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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