May 23, 2024
Top 10 Stock Software 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: Software – Top 10 Stock in Germany TECDAX
Software is listed as a top 10 stock on May 23, 2024 in the market index TecDAX because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° View of 33 (33% performer), Obermatt assesses an overall hold recommendation for Software on May 23, 2024.
Snapshot: Obermatt Ranks
| Country | Germany |
| Industry | Systems Software |
| Index | CDAX, Artificial Intelligence, Dividends Europe, MDAX, TecDAX |
| 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 Software Hold
| 360 METRICS | May 23, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 60 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 91 |
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| SENTIMENT | ||||||||
| SENTIMENT | 18 |
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| 360° VIEW | ||||||||
| 360° VIEW | 33 |
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ANALYSIS: With an Obermatt 360° View of 33 (better than 33% compared with alternatives), overall professional sentiment and financial characteristics for the stock Software are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Software. The consolidated Value Rank has an attractive rank of 60, which means that the share price of Software 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 60% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 91. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 18. Professional investors are more confident in 82% other stocks. The consolidated Growth Rank also has a low rank of 15, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 85 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 33, Software is worse than 67% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 60), and the financing structure is on the safer side (Safety Rank of 91). However, sentiment in the professional investor community is below-average (Sentiment Rank of 18), as is the growth momentum for the company (Growth Rank of 15). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for Software negative
ANALYSIS: With an Obermatt Sentiment Rank of 18 (better than 18% compared with alternatives), overall professional sentiment and engagement for the stock Software is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Software. Analyst Opinions are at a rank of 1 (worse than 99% 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 58, which means that stock research experts have found something to make them more positive about investing in the company. In other words, they are getting more optimistic of stock investments in Software. But the Professional Investors rank is low at 31, which means that professional investors hold less stock in this company than in 69% of alternative investment opportunities. Pros tend to invest in other companies. Market Pulse is also low at a rank of 13, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 87% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 18 (less encouraging than 82% compared with investment alternatives), Software has a reputation among professional investors that is far below that of its competitors. These are quite a few negative sentiment signals. One may want to trust the analysts that are changing their opinions. They may be early indications of better times, especially if the company is a smaller one. But If they are an extra large company, they should have more professional stockholders than are currently present. ...read more
Value Strategy: Software Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 60 (better than 60% compared with alternatives), Software shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Software. Expected dividend yields are higher than for 57% of comparable companies (a Dividend Yield rank of 57), making the stock attractive. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 77, which means that the stock price is lower compared with invested capital than for 77% of comparable investments. But in respect to sales and profits, the picture is reversed. Price-to-Sales is 46 which means that the stock price compared with what market professionals expect for future profits is higher than for 54% of comparable companies, indicating a low value concerning Software's sales levels. The Price-to-Profit ratio (also referred to as price-earnings (P/E) ratio) is also unfavorable for Software with a rank of 42. This means that the stock price, compared with what market professionals expect for future profits, is higher than for 58% of comparable companies, indicating a low value concerning Software's profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 60, is a buy recommendation based on Software's stock price compared with the company's operational size and dividend yields. The company seems confident that it can generate a reasonable return on invested capital, because it pays an above-average dividend while profits are below what you would expect for a company with this stock price. If you agree with this practice and believe that profits will return to higher levels, as the current dividend policy suggests, Software may be an attractive investment. If this is not the case, you may want to be careful with this stock as it is also expensive compared with its expected revenue levels. ...read more
Growth Strategy: Software Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 15 (better than 15% compared with alternatives), Software shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Software. Sales Growth has a below market rank of 31, which means that, currently, professionals expect the company to grow less than 69% of its competitors. The same is valid for Capital Growth, with a rank of 1, and Profit Growth, with a rank of 16. Currently, professionals expect the company to grow its profits less than 84% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 70, which means that the stock returns have recently been above 70% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 15, is a sell recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Software, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: Software Debt Financing Safety very solid
| SAFETY METRICS | May 23, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 93 |
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| REFINANCING | ||||||||
| REFINANCING | 94 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 37 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 91 |
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ANALYSIS: With an Obermatt Safety Rank of 91 (better than 91% compared with alternatives) for 2024, the company Software has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Software is safe, it only means that the company is on the safer side regarding possible bankruptcy, 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 Software.Leverage is at 93, meaning the company has a below-average debt-to-equity ratio. It has less debt than 93% of its competitors.Refinancing is at a rank of 94, 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 94% of its competitors. Liquidity is at 37, meaning that the company generates less profit to service its debt than 63% 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 91 (better than 91% compared with alternatives), Software has a financing structure that is significantly safer 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: Software Above-Average Financial Performance
| COMBINED PERFORMANCE | May 23, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 60 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 37 |
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| COMBINED | ||||||||
| COMBINED | 51 |
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ANALYSIS: With an Obermatt Combined Rank of 51 (better than 51% compared with investment alternatives), Software (Systems Software, Germany) shares have above-average financial characteristics compared with similar stocks. Shares of Software are a good value (attractively priced) with a consolidated Value Rank of 60 (better than 60% of alternatives), are safely financed (Safety Rank of 91, which means low debt burdens), but show below-average growth (Growth Rank of 15). ...read more
RECOMMENDATION: A Combined Rank of 51, is a buy recommendation based on Software's financial characteristics. As the company Software's key financial metrics exhibit good value (Obermatt Value Rank of 60) but low growth (Obermatt Growth Rank of 15) while being safely financed (Obermatt Safety Rank of 91), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 60% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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