June 20, 2024
Top 10 Stock Aurizon Hold 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 50
Aurizon is listed as a top 10 stock on June 20, 2024 in the market index ASX 50 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° View of 30 (30% performer), Obermatt assesses an overall hold recommendation for Aurizon on June 20, 2024.
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° View Aurizon Hold
| 360 METRICS | June 20, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 43 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 55 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 21 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 55 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 30 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 30 (better than 30% compared with alternatives), overall professional sentiment and financial characteristics for the stock Aurizon are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Aurizon. The consolidated Growth Rank has a good rank of 55, 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 55% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 55, which means that professional investors are more optimistic about the stock than for 55% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 43, 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 57% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 21, which means that the company has a financing structure that is riskier than those of 79% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 30, Aurizon is worse than 70% 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 55), and professional market sentiment is positive (Sentiment Rank of 55), but value and safety are below average. The Safety Rank is the least significant 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 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. 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 if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Aurizon positive
ANALYSIS: With an Obermatt Sentiment Rank of 55 (better than 55% compared with alternatives), overall professional sentiment and engagement for the stock Aurizon is above 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 33 (worse than 67% 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 79, meaning that professional investors hold more stock in this company than in 79% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 61, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 61% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 55 (more positive than 55% compared with investment alternatives), Aurizon has a reputation among professional investors that is above-average compared with 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 43 (worse than 57% 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) is 57 which means that the stock price compared with what market professionals expect for future profits is lower than for 57% 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 a Price-to-Book Rank of 25, which means that the stock price is lower as regards to invested capital than for 25% of comparable investments. On the other hand, Price-to-Sales is less favorable than 68% of alternatives (only 32% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 6% 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 43, 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, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Aurizon Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 55 (better than 55% compared with alternatives), Aurizon 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 all but one indicator above average for Aurizon. Sales Growth has a rank of 61 which means that currently, professionals expect the company to grow more than 61% of its competitors. Both Profit Growth, with a rank of 57, and Stock Returns, with a rank of 61, are also above average. But Capital Growth only has a rank of 38, which means that, currently, professionals expect the company to grow its invested capital less than 62% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 55, is a buy recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: Aurizon Debt Financing Safety risky
| SAFETY METRICS | June 20, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 26 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 21 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 41 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 21 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 21 (better than 21% 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 all three metrics below average for Aurizon. Liquidity is at 41, meaning that the company generates less profit to service its debt than 59% 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 26, meaning the company has an above-average debt-to-equity ratio. It has more debt than 74% of its competitors. Finally, Refinancing is at a rank of 21 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 79% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 21 (worse than 79% compared with alternatives), Aurizon 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: Aurizon Lowest Financial Performance
| COMBINED PERFORMANCE | June 20, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 43 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 55 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 41 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 19 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 19 (worse than 81% 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 Value Rank of 43 (worse than 57% of alternatives), and are riskily financed (Safety Rank of 21, which means above-average debt burdens) but show above-average growth (Growth Rank of 55). ...read more
RECOMMENDATION: A Combined Rank of 19, is a sell recommendation based on Aurizon's financial characteristics. As the company Aurizon shows low value with an Obermatt Value Rank of 43 (57% 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 55% of comparable companies (Obermatt Growth Rank is 55). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 21 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 Aurizon, even a low-value company (in terms of its key financial indicators) can be a good investment. ...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.