November 21, 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 Water Technology
Service Stream is listed as a top 10 stock on November 21, 2024 in the market index Water Tech 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 November 21, 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 | November 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 73 |
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| SAFETY | ||||||||
| SAFETY | 47 |
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| SENTIMENT | ||||||||
| SENTIMENT | 96 |
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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 73, 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 73% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 96, which means that professional investors are more optimistic about the stock than for 96% 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 47, which means that the company has a financing structure that is riskier than those of 53% 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 73), and professional market sentiment is positive (Sentiment Rank of 96), 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 96 (better than 96% 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 where all but one are above average for Service Stream. Analyst Opinions are at a rank of 84 (better than 84% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 91, which means that currently, professional investors hold more stock in this company than in 91% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, 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). But Analyst Opinions Change has a below-average rank of 40, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in Service Stream. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 96 (more positive than 96% compared with investment alternatives), Service Stream has a reputation among professional investors that is significantly higher than that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...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 71, which means that the stock price compared with what market professionals expect for future sales is lower than for 71% 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 60, which means that dividends are expected to be higher than for 60% 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 59% 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 good
| GROWTH METRICS | November 21, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 41 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 39 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 82 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 91 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 73 |
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ANALYSIS: With an Obermatt Growth Rank of 73 (better than 73% compared with alternatives), Service Stream 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 Service Stream. Capital Growth has a rank of 82, which means that currently professionals expect the company to grow its invested capital more than 39% 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 41, which means that, currently, professionals expect the company to grow less than 59% of its competitors, and Profit Growth is also low at a rank of 39. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 73, 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 Service Stream, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Service Stream Debt Financing Safety below-average
| SAFETY METRICS | November 21, 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 | 47 |
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ANALYSIS: With an Obermatt Safety Rank of 47 (better than 47% 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 47 (worse than 53% 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 | November 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 73 |
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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 47, which means above-average debt burdens) but show above-average growth (Growth Rank of 73). ...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 73% of comparable companies (Obermatt Growth Rank is 73). 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 47 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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