September 12, 2024
Top 10 Stock Recruits 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: Recruits – Top 10 Stock in Nikkei 225 Index
Recruits is listed as a top 10 stock on September 12, 2024 in the market index Nikkei 225 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 41 (41% performer), Obermatt assesses an overall hold recommendation for Recruits on September 12, 2024.
Snapshot: Obermatt Ranks
| Country | Japan |
| Industry | HR- & Employment Services |
| Index | TOPIX 100, Nikkei 225 |
| Size class | XX-Large |
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 Recruits Hold
| 360 METRICS | September 12, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 13 |
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| GROWTH | ||||||||
| GROWTH | 59 |
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| SAFETY | ||||||||
| SAFETY | 48 |
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| SENTIMENT | ||||||||
| SENTIMENT | 91 |
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| 360° VIEW | ||||||||
| 360° VIEW | 41 |
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ANALYSIS: With an Obermatt 360° View of 41 (better than 41% compared with alternatives), overall professional sentiment and financial characteristics for the stock Recruits 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 Recruits. The consolidated Growth Rank has a good rank of 59, 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 59% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 91, which means that professional investors are more optimistic about the stock than for 91% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 13, which means that the share price of Recruits 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 87% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 48, which means that the company has a financing structure that is riskier than those of 52% 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 41, Recruits is worse than 59% 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 59), and professional market sentiment is positive (Sentiment Rank of 91), 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 Recruits very positive
ANALYSIS: With an Obermatt Sentiment Rank of 91 (better than 91% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Recruits is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Recruits. Analyst Opinions are at a rank of 76 (better than 76% 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 83, 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 Recruits. The Professional Investors rank is 94, which means that currently, professional investors hold more stock in this company than in 94% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 52 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 52% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 91 (more positive than 91% compared with investment alternatives), Recruits 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 Recruits 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: Recruits Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 13 (worse than 87% compared with alternatives), Recruits shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Recruits. Price-to-Sales is 34 which means that the stock price compared with what market professionals expect for future profits is higher than 66% of comparable companies, indicating a low value concerning Recruits's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 20, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Recruits. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 22 and Dividend Yield, which is lower than 76% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 13, is a sell recommendation based on Recruits's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Recruits? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Recruits? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Recruits may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Recruits Growth Momentum good
| GROWTH METRICS | September 12, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 23 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 30 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 66 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 91 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 59 |
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ANALYSIS: With an Obermatt Growth Rank of 59 (better than 59% compared with alternatives), Recruits 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 Recruits. Capital Growth has a rank of 66, which means that currently professionals expect the company to grow its invested capital more than 30% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 91 (above 91% of alternative investments). But Sales Growth has only a rank of 23, which means that, currently, professionals expect the company to grow less than 77% of its competitors, and Profit Growth is also low at a rank of 30. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 59, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Recruits, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Recruits Debt Financing Safety below-average
| SAFETY METRICS | September 12, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 54 |
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| REFINANCING | ||||||||
| REFINANCING | 34 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 78 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 48 |
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ANALYSIS: With an Obermatt Safety Rank of 48 (better than 48% compared with alternatives), the company Recruits has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Recruits 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 two out of three indicators above average for Recruits. Leverage is at a rank of 54, meaning the company has a below-average debt-to-equity ratio. It has less debt than 54% of its competitors. Liquidity is also good at a rank of 78, meaning the company generates more profit to service its debt than 78% 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 34, 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 66% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 48 (worse than 52% compared with alternatives), Recruits has a financing structure that is riskier 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 Recruits. 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. ...read more
Combined financial peformance: Recruits Lowest Financial Performance
| COMBINED PERFORMANCE | September 12, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 13 |
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| GROWTH | ||||||||
| GROWTH | 59 |
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| SAFETY | ||||||||
| SAFETY | 78 |
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| COMBINED | ||||||||
| COMBINED | 20 |
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ANALYSIS: With an Obermatt Combined Rank of 20 (worse than 80% compared with investment alternatives), Recruits (HR- & Employment Services, Japan) shares have lower financial characteristics compared with similar stocks. Shares of Recruits are low in value (priced high) with a consolidated Value Rank of 13 (worse than 87% of alternatives), and are riskily financed (Safety Rank of 48, which means above-average debt burdens) but show above-average growth (Growth Rank of 59). ...read more
RECOMMENDATION: A Combined Rank of 20, is a sell recommendation based on Recruits's financial characteristics. As the company Recruits shows low value with an Obermatt Value Rank of 13 (87% 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 59% of comparable companies (Obermatt Growth Rank is 59). 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 48 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 Recruits, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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