May 11, 2023
Top 10 Stock Aurizon 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: Aurizon – Top 10 Stock in Australian Securities Exchange Index ASX 100
Aurizon 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. All consolidated Obermatt Ranks are below-average. Based on the Obermatt Method, an investment in the company is not advisable today. Based on the Obermatt 360° Rank of 13 (13% performer), Obermatt issues an overall sell recommendation for Aurizon 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 Aurizon Sell
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 45 |
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| GROWTH | ||||||||
| GROWTH | 37 |
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| SAFETY | ||||||||
| SAFETY | 24 |
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| SENTIMENT | ||||||||
| SENTIMENT | 48 |
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| 360° VIEW | ||||||||
| 360° VIEW | 13 |
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ANALYSIS: With an Obermatt 360° Rank of 13 (better than 13% compared with alternatives), overall professional sentiment and engagement for the stock Aurizon are critical, mostly below average. The 360° Rank is based on consolidating four consolidated indicators, with all four indicators below average for Aurizon. The consolidated Value Rank has a low rank of 45 which means that the share price of Aurizon 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 55% of alternative stocks in the same industry. The consolidated Growth Rank also has a low rank of 37, 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. This means that growth is lower than for 37% of competitors in the same industry. The consolidated Safety Rank has a riskier rank of 24, which means that the company has a riskier financing structure than 76% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a low rank of 48, which means that professional investors are more pessimistic about the stock than for 52% of alternative investment opportunities. ...read more
RECOMMENDATION: With a 360° Rank of 13, Aurizon is worse than 87% of all alternative stock investment opportunities based on the Obermatt Method. This means that Aurizon shares are on the riskier side for investors. As all consolidated Obermatt Ranks are below-average, this is a risky stock investment proposition, especially since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 48. The negative market view on Aurizon may stem from the high stock price (low value), the low level of growth, or the risky financing structures. That's several problems with no good news anywhere. Based on the current information, we don’t see any compelling arguments to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not confirmed by investor behavior today. While Aurizon may have a bright future, it is reflected in neither the financial indicators nor the market sentiment. ...read more
Sentiment Strategy: Professional Market Sentiment for Aurizon only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 48 (better than 48% compared with alternatives), overall professional sentiment and engagement for the stock Aurizon is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Aurizon. Analyst Opinions are at a rank of 41 (worse than 59% 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 indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Aurizon. Even better, the Professional Investors rank is 65, meaning that professional investors hold more stock in this company than in 65% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 50, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 50% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 48 (less encouraging than 52% compared with investment alternatives), Aurizon has a reputation among professional investors that is below 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: Aurizon Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 45 (worse than 55% compared with alternatives), Aurizon 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 Aurizon. Price-to-Profit (also referred to as price-earnings, P/E) has a value of 67 which means that the stock price compared with what market professionals expect for future profits is lower than 67% of comparable companies, indicating a good value concerning Aurizon's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with an Obermatt Price-to-Book Rank of 37, which means that the stock price is lower compared with invested capital than for 37% of comparable investments. On the other hand, Price-to-Sales is less favorable than 80% of alternatives (only 20% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 10% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 45, is a HOLD recommendation based on Aurizon'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, sealing the company's fate early. This needs to be investigated, and the company's optimism verified before deciding to buy the stock. ...read more
Growth Strategy: Aurizon Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 37 (better than 37% compared with alternatives), Aurizon 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 three out of four indicators below-average for Aurizon. While Sales Growth ranks at 70, professionals currently expect the company to grow more than 70% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 33, which means that, currently, professionals expect the company to grow its profits less than 67% of its competitors, and Capital Growth has a rank of 19. Historic stock returns were also below average with a current Stock Returns rank of 49 which means that the stock returns have recently been below 51% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 37, is a HOLD recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. ...read more
Safety Strategy: Aurizon Debt Financing Safety risky
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 39 |
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| REFINANCING | ||||||||
| REFINANCING | 18 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 53 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 24 |
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ANALYSIS: With an Obermatt Safety Rank of 24 (better than 24% compared with alternatives), the company Aurizon 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 Aurizon 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 just one indicator above average for Aurizon. Liquidity is at 53, meaning the company generates more profit to service its debt than 53% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 18, 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 82% of its competitors. Leverage is also high at a rank of 39, which means that the company has an above-average debt-to-equity ratio. It has more debt than 61% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 24 (worse than 76% compared with alternatives), Aurizon has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usuallyl indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Aurizon Lowest Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 45 |
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| GROWTH | ||||||||
| GROWTH | 37 |
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| SAFETY | ||||||||
| SAFETY | 53 |
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| COMBINED | ||||||||
| COMBINED | 10 |
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ANALYSIS: With an Obermatt Combined Rank of 10 (worse than 90% compared with investment alternatives), Aurizon (Railroads, Australia) shares have lower financial characteristics compared with similar stocks. Shares of Aurizon are low in value (priced high) with a consolidated Obermatt Value Rank of 45 (worse than 55% of alternatives), show below-average growth (Growth Rank of 37), and are riskily financed (Safety Rank of 24), which means above-average debt burdens. ...read more
RECOMMENDATION: An Obermatt Combined Rank of 10, is a sell recommendation based on Aurizon's financial characteristics. As the company Aurizon's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 45), low growth (Obermatt Growth Rank of 37), and risky financing practices (Obermatt Safety Rank of 24), 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. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be used in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
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