July 27, 2023
Top 10 Stock Service Stream 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: Service Stream – Top 10 Stock in Australian Securities Exchange Index ASX 200
Service Stream is listed as a top 10 stock on July 27, 2023 in the market index ASX 200 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low. Based on the Obermatt 360° View of 70 (high 70% performer), Obermatt assesses an overall buy recommendation for Service Stream on July 27, 2023.
Snapshot: Obermatt Ranks
| Country | Australia |
| Industry | Construction & Engineering |
| Index | ASX 200, ASX 300, Water Tech |
| Size class | 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 Service Stream Buy
| 360 METRICS | July 27, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 54 |
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| GROWTH | ||||||||
| GROWTH | 85 |
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| SAFETY | ||||||||
| SAFETY | 45 |
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| SENTIMENT | ||||||||
| SENTIMENT | 56 |
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| 360° VIEW | ||||||||
| 360° VIEW | 70 |
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ANALYSIS: With an Obermatt 360° View of 70 (better than 70% compared with alternatives), overall professional sentiment and financial characteristics for the stock Service Stream are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Service Stream. The consolidated Value Rank has an attractive rank of 54, which means that the share price of Service Stream is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 54% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 85, 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. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 56. But the company’s financing is risky with a Safety rank of 45. This means 55% of comparable companies have a safer financing structure than Service Stream. ...read more
RECOMMENDATION: With a consolidated 360° View of 70, Service Stream is better positioned than 70% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 54), above-average growth (Growth Rank of 85), and positive market sentiment in the professional investor community (Sentiment Rank of 56), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 45), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of Service Stream is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Service Stream positive
ANALYSIS: With an Obermatt Sentiment Rank of 56 (better than 56% compared with alternatives), overall professional sentiment and engagement for the stock Service Stream is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Service Stream. Analyst Opinions are at a rank of 81 (better than 81% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 50, which means that currently, stock research experts are getting even more optimistic. Obermatt Market Pulse further supports this with a rank of 50, which means that the current professional news and professional social networks are generally positive when discussing this company (more positive news than for 50% of competitors). But there are few stock holdings by institutional investors. The Professional Investors rank is low at 30, which means that currently, professional investors hold less stock in this company than in 70% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 56 (more positive than 56% compared with investment alternatives), Service Stream has a reputation among professional investors that is above-average compared with that of its competitors. Not having too many professionals invested in Service Stream may be less of an issue, especially if the stock is from a smaller company where professionals typically invest less. It is natural for professional investors to focus on large and extra-large companies, as they provide more safety. Smaller companies attract fewer professionals in the shareholder community. Overall, the signals from the professionals are still quite favorable for investments in Service Stream. ...read more
Value Strategy: Service Stream Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 54 (better than 54% compared with alternatives), Service Stream shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Service Stream. Price-to-Sales (P/S) is 76, which means that the stock price compared with what market professionals expect for future sales is lower than for 76% of comparable companies, indicating a good value concerning Service Stream's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 59% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 59 (dividends are expected to be higher than 59% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 51% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for Service Stream to 49. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 54, is a buy recommendation based on Service Stream'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 in 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 three good value ranks for Sales, Profits, and Dividends are reliable indicators for the stock price value. ...read more
Growth Strategy: Service Stream Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 85 (better than 85% compared with alternatives) for 2023, Service Stream 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 but one indicator above average for Service Stream. Sales Growth has a value of 79 which means that currently professionals expect the company to grow more than 79% of its competitors. Profit Growth with a value of 61 and Capital Growth with a rank of 77 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 21, which means that stock returns have recently been below 79% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 85, is a buy recommendation for growth and momentum investors. Service Stream has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for Service Stream, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. ...read more
Safety Strategy: Service Stream Debt Financing Safety below-average
| SAFETY METRICS | July 27, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 50 |
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| REFINANCING | ||||||||
| REFINANCING | 53 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 28 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 45 |
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ANALYSIS: With an Obermatt Safety Rank of 45 (better than 45% compared with alternatives), the company Service Stream 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 Service Stream 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 where two out of three are above average for Service Stream.Leverage is at 50, meaning the company has a below-average debt-to-equity ratio. It has less debt than 50% of its competitors.Refinancing is at a rank of 53, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 53% of its competitors. Liquidity is at 28, meaning that the company generates less profit to service its debt than 72% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 45 (worse than 55% compared with alternatives), Service Stream has a financing structure that is riskier than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. ...read more
Combined financial peformance: Service Stream Top Financial Performance
| COMBINED PERFORMANCE | July 27, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 54 |
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| GROWTH | ||||||||
| GROWTH | 85 |
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| SAFETY | ||||||||
| SAFETY | 28 |
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| COMBINED | ||||||||
| COMBINED | 84 |
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ANALYSIS: With an Obermatt Combined Rank of 84 (better than 84% compared with investment alternatives), Service Stream (Construction & Engineering, Australia) shares have much better financial characteristics than comparable stocks. Shares of Service Stream are a good value (attractively priced) with a consolidated Value Rank of 54 (better than 54% of alternatives), show above-average growth (Growth Rank of 85) but are riskily financed (Safety Rank of 45), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 84, is a strong buy recommendation based on Service Stream's financial characteristics. As the company Service Stream's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 54) and above-average growth (Obermatt Growth Rank of 85), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 45) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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