October 10, 2024
Top 10 Stock Solvay 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: Solvay – Top 10 Stock in Diversity Leaders in Europe
Solvay is listed as a top 10 stock on October 10, 2024 in the market index Diversity Europe 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 52 (high 52% performer), Obermatt assesses an overall buy recommendation for Solvay on October 10, 2024.
Snapshot: Obermatt Ranks
| Country | Belgium |
| Industry | Diversified Chemicals |
| Index | BEL20, CAC All, SBF 120, Dividends Europe, Energy Efficient, Diversity Europe |
| 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 Solvay Buy
| 360 METRICS | October 10, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 60 |
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| GROWTH | ||||||||
| GROWTH | 51 |
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| SAFETY | ||||||||
| SAFETY | 15 |
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| SENTIMENT | ||||||||
| SENTIMENT | 73 |
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| 360° VIEW | ||||||||
| 360° VIEW | 52 |
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ANALYSIS: With an Obermatt 360° View of 52 (better than 52% compared with alternatives), overall professional sentiment and financial characteristics for the stock Solvay are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Solvay. The consolidated Value Rank has an attractive rank of 60, which means that the share price of Solvay 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 consolidated Growth Rank has a good rank of 51, 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 73. But the company’s financing is risky with a Safety rank of 15. This means 85% of comparable companies have a safer financing structure than Solvay. ...read more
RECOMMENDATION: With a consolidated 360° View of 52, Solvay is better positioned than 52% 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 60), above-average growth (Growth Rank of 51), and positive market sentiment in the professional investor community (Sentiment Rank of 73), 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 15), 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 Solvay 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 Solvay positive
ANALYSIS: With an Obermatt Sentiment Rank of 73 (better than 73% compared with alternatives), overall professional sentiment and engagement for the stock Solvay is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Solvay. Analyst Opinions are at a rank of 30 (worse than 70% 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 68, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Solvay. More encouragingly, the Professional Investors rank is 73, which means that professional investors hold more stock in this company than in 73% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 35, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 65% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 73 (more positive than 73% compared with investment alternatives), Solvay has a reputation among professional investors that is above-average compared with that of its competitors. The sentiment signals are mixed for Solvay. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: Solvay Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 60 (better than 60% compared with alternatives), Solvay 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 Solvay. Price-to-Profit (also referred to as price-earnings, P/E) is 84 which means that the stock price compared with what market professionals expect for future profits is lower than for 84% of comparable companies, indicating a good value concerning Solvay's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 14, which means that the stock price is lower as regards to invested capital than for 14% of comparable investments. On the other hand, Price-to-Sales is less favorable than 57% of alternatives (only 43% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 2% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 60, is a buy recommendation based on Solvay's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Solvay Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 51 (better than 51% compared with alternatives), Solvay 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 Solvay. Capital Growth has a rank of 75, which means that currently professionals expect the company to grow its invested capital more than 7% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 98 (above 98% of alternative investments). But Sales Growth has only a rank of 16, which means that, currently, professionals expect the company to grow less than 84% of its competitors, and Profit Growth is also low at a rank of 7. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 51, 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 Solvay, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Solvay Debt Financing Safety risky
| SAFETY METRICS | October 10, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 3 |
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| REFINANCING | ||||||||
| REFINANCING | 23 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 75 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 15 |
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ANALYSIS: With an Obermatt Safety Rank of 15 (better than 15% compared with alternatives), the company Solvay has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Solvay 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 Solvay. Liquidity is at 75, meaning the company generates more profit to service its debt than 75% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 23, 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 77% of its competitors. Leverage is also high at a rank of 3, which means that the company has an above-average debt-to-equity ratio. It has more debt than 97% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 15 (worse than 85% compared with alternatives), Solvay has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Solvay Below-Average Financial Performance
| COMBINED PERFORMANCE | October 10, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 60 |
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| GROWTH | ||||||||
| GROWTH | 51 |
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| SAFETY | ||||||||
| SAFETY | 75 |
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| COMBINED | ||||||||
| COMBINED | 31 |
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ANALYSIS: With an Obermatt Combined Rank of 31 (worse than 69% compared with investment alternatives), Solvay (Diversified Chemicals, Belgium) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Solvay are a good value (attractively priced) with a consolidated Value Rank of 60 (better than 60% of alternatives), show above-average growth (Growth Rank of 51) but are riskily financed (Safety Rank of 15), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 31, is a hold recommendation based on Solvay's financial characteristics. As the company Solvay's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 60) and above-average growth (Obermatt Growth Rank of 51), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 15) 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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