May 11, 2023
Top 10 Stock Sonic Sell 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: Sonic – Top 10 Stock in Australian Securities Exchange Index ASX 100
Sonic is listed as a top 10 stock on May 11, 2023 in the market index ASX 100 because of its high performance in at least one of the Obermatt investment strategies. While half of the consolidated Obermatt Ranks exhibit above-average performance and professional market sentiment is positive, it may be a solid investment proposition, especially if it can be expected that growth recovers soon. Based on the Obermatt 360° Rank of 21 (21% performer), Obermatt issues an overall sell recommendation for Sonic on May 11, 2023.
Snapshot: Obermatt Ranks
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° Assessment Sonic Sell
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 57 |
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| GROWTH | ||||||||
| GROWTH | 5 |
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| SAFETY | ||||||||
| SAFETY | 21 |
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| SENTIMENT | ||||||||
| SENTIMENT | 88 |
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| 360° VIEW | ||||||||
| 360° VIEW | 21 |
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ANALYSIS: With an Obermatt 360° Rank of 21 (better than 21% compared with alternatives), overall professional sentiment and engagement for the stock Sonic are critical, mostly below average. The 360° Rank is based on consolidating four consolidated indicators, with half the metrics below and half above average for Sonic. The consolidated Value Rank has an attractive rank of 57, which means that the share price of Sonic is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 57% of alternative stocks in the same industry. The consolidated Sentiment Rank has a good rank of 88, which means that professional investors are more optimistic about the stock than for 88% of alternative investment opportunities. But the consolidated Growth Rank has a low rank of 5, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. The consolidated Safety Rank has a riskier rank of 21, meaning the company has a riskier financing structure than 79 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a 360° Rank of 21, Sonic is worse than 79% of all alternative stock investment opportunities based on the Obermatt Method. This means that Sonic shares are on the riskier side for investors. Half of the consolidated Obermatt Ranks exhibit above-average performance, but the other half are below market levels. The company enjoys a good value (Value Rank of 57) and positive market sentiment in the professional investor community (Sentiment Rank of 88), but growth expectations are below-average (Growth Rank of 5) and the financing structure is on the risky side(Safety Rank of 21). This combination is rather dangerous, because high debt levels (low safety) require growth to finance the debt burden. The current low growth level may be temporary, because professionals are actually optimistic (high sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. Companies with less growth typically have a lower price than fast-growing competitors. Even though professional investor sentiment is strong, we recommend further evaluating whether the future of Sonic is as challenging as the stock's low price suggests. Since the professional community is optimistic, the stock might just be going through a more challenging phase now, indicating that timing might be good now. ...read more
Sentiment Strategy: Professional Market Sentiment for Sonic very positive
ANALYSIS: With an Obermatt Sentiment Rank of 88 (better than 88% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Sonic is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Sonic. Analyst Opinions are at a rank of 37 (worse than 63% 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 66, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Sonic. Even better, the Professional Investors rank is 91, meaning that professional investors hold more stock in this company than in 91% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 84, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 84% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 88 (more positive than 88% compared with investment alternatives), Sonic has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Sonic Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 57 (better than 57% compared with alternatives), Sonic shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Sonic. Price-to-Sales (P/S) has a value of 50, which means that the stock price compared with what market professionals expect for future sales is lower than 50% of comparable companies, indicating a good value concerning Sonic's revenue size. The same is valid for dividend yields with an Obermatt Dividend Yield rank of 76, which means that dividends are expected to be higher than 76% of comparable investments. On the other hand, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 51% of alternatives (only 49% of peers have an even higher ratio). The same is valid for Price-to-Profit (or Price / Earnings, P/E), which is higher than 51% 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 57, is a BUY recommendation based on Sonic'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: Sonic Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 5 (better than 5% compared with alternatives), Sonic 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 all four metrics below average for Sonic. Sales Growth has a rank of 12, which means that currently professionals expect the company to grow less than 88% of its competitors. The same is valid for Profit Growth, with a rank of 10, and Capital Growth with 38. In addition, Stock Returns have a below market rank of 45, which means that the stock returns have recently been below 55% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 5, is a SELL recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's prospects, especially Sentiment performance, because it may be a turnaround situation that could entail above-average returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Sonic Debt Financing Safety risky
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 39 |
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| REFINANCING | ||||||||
| REFINANCING | 16 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 40 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 21 |
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ANALYSIS: With an Obermatt Safety Rank of 21 (better than 21% compared with alternatives), the company Sonic 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 Sonic 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 all three metrics below average for Sonic. Liquidity is at 40, meaning that the company generates less profit to service its debt than 60% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 39, meaning the company has an above-average debt-to-equity ratio. It has more debt than 61% of its competitors. Finally, Refinancing is at a rank of 16 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 84% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 21 (worse than 79% compared with alternatives), Sonic has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing. ...read more
Combined financial peformance: Sonic Lowest Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 57 |
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| GROWTH | ||||||||
| GROWTH | 5 |
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| SAFETY | ||||||||
| SAFETY | 40 |
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| COMBINED | ||||||||
| COMBINED | 4 |
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ANALYSIS: With an Obermatt Combined Rank of 4 (worse than 96% compared with investment alternatives), Sonic (Health Care Services, Australia) shares have lower financial characteristics compared with similar stocks. Shares of Sonic are a good value (attractively priced) with a consolidated Obermatt Value Rank of 57 (better than 57% of alternatives) but show below-average growth (Growth Rank of 5), and are riskily financed (Safety Rank of 21), which means above-average debt burdens. ...read more
RECOMMENDATION: An Obermatt Combined Rank of 4, is a sell recommendation based on Sonic's financial characteristics. As the company Sonic's key financial metrics exhibit good value (Obermatt Value Rank of 57) but low growth (Obermatt Growth Rank of 5) and risky financing practices (Obermatt Safety Rank of 21), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 57% of comparable companies, may indicate 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. ...read more
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