October 17, 2024
Top 10 Stock Service Stream Strong 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 October 17, 2024 in the market index ASX 200 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 90 (top 90% performer), Obermatt assesses an overall strong buy recommendation for Service Stream on October 17, 2024.
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 Strong Buy
| 360 METRICS | October 17, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 77 |
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| SAFETY | ||||||||
| SAFETY | 46 |
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| SENTIMENT | ||||||||
| SENTIMENT | 92 |
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| 360° VIEW | ||||||||
| 360° VIEW | 90 |
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ANALYSIS: With an Obermatt 360° View of 90 (better than 90% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Service Stream are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Service Stream. The consolidated Growth Rank has a good rank of 77, 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 77% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 92, which means that professional investors are more optimistic about the stock than for 92% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 49, which means that the share price of Service Stream 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 51% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 46, which means that the company has a financing structure that is riskier than those of 54% 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 90, Service Stream is better positioned than 90% 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 77), and professional market sentiment is positive (Sentiment Rank of 92), 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 Service Stream very positive
ANALYSIS: With an Obermatt Sentiment Rank of 92 (better than 92% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Service Stream is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Service Stream. Analyst Opinions are at a rank of 87 (better than 87% 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 50, 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 Service Stream. The Professional Investors rank is 72, which means that currently, professional investors hold more stock in this company than in 72% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 77 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 77% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 92 (more positive than 92% compared with investment alternatives), Service Stream 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 Service Stream 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: Service Stream Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 49 (worse than 51% compared with alternatives), Service Stream 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 above average for Service Stream. Price-to-Sales (P/S) is 73, which means that the stock price compared with what market professionals expect for future sales is lower than for 73% of comparable companies, indicating a good value concerning Service Stream's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 67, which means that dividends are expected to be higher than for 67% of comparable investments. On the other hand, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is less favorable than for 72% of alternatives (only 28% of peers have an even higher ratio). The same is valid for the Price-to-Profit (or Price / Earnings, P/E) ratio, which is higher than for 52% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 49, is a hold recommendation based on Service Stream's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. ...read more
Growth Strategy: Service Stream Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 77 (better than 77% compared with alternatives) for 2024, 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. Profit Growth has a rank of 50 which means that currently professionals expect the company to grow its profits more than 50% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 70, and Stock Returns has a rank of 93 which means that the stock returns have recently been above 93% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 39 (61% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 77, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Service Stream Debt Financing Safety below-average
| SAFETY METRICS | October 17, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 64 |
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| REFINANCING | ||||||||
| REFINANCING | 37 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 33 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 46 |
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ANALYSIS: With an Obermatt Safety Rank of 46 (better than 46% 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, with just one indicator above average for Service Stream and the other two below average. Leverage is at a rank of 64 meaning the company has a below-average debt-to-equity ratio. It has less debt than 64% of its competitors.Refinancing is at a rank of 37, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 63% of its competitors. Liquidity is at a rank of 33, meaning that the company generates less profit to service its debt than 67% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 46 (worse than 54% compared with alternatives), Service Stream has a financing structure that is riskier than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of Service Stream are on the safer side. ...read more
Combined financial peformance: Service Stream Above-Average Financial Performance
| COMBINED PERFORMANCE | October 17, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 77 |
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| SAFETY | ||||||||
| SAFETY | 33 |
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| COMBINED | ||||||||
| COMBINED | 59 |
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ANALYSIS: With an Obermatt Combined Rank of 59 (better than 59% compared with investment alternatives), Service Stream (Construction & Engineering, Australia) shares have above-average financial characteristics compared with similar stocks. Shares of Service Stream are low in value (priced high) with a consolidated Value Rank of 49 (worse than 51% of alternatives), and are riskily financed (Safety Rank of 46, which means above-average debt burdens) but show above-average growth (Growth Rank of 77). ...read more
RECOMMENDATION: A Combined Rank of 59, is a buy recommendation based on Service Stream's financial characteristics. As the company Service Stream shows low value with an Obermatt Value Rank of 49 (51% 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 77% of comparable companies (Obermatt Growth Rank is 77). 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 46 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 Service Stream, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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