May 11, 2023
Top 10 Stock Suncorp 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: Suncorp – Top 10 Stock in Australian Securities Exchange Index ASX 100
Suncorp 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. 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° Rank of 92 (top 92% performer), Obermatt assesses an overall strong buy recommendation for Suncorp 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 Suncorp Strong Buy
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 46 |
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| GROWTH | ||||||||
| GROWTH | 87 |
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| SAFETY | ||||||||
| SAFETY | 36 |
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| SENTIMENT | ||||||||
| SENTIMENT | 100 |
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| 360° VIEW | ||||||||
| 360° VIEW | 92 |
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ANALYSIS: With an Obermatt 360° Rank of 92 (better than 92% compared with alternatives) for 2022, overall professional sentiment and engagement for the stock Suncorp are very positive. The 360° Rank is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Suncorp. The consolidated Growth Rank has a good rank of 87, 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 87% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 100, which means that professional investors are more optimistic about the stock than for 100% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 46, which means that the share price of Suncorp 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 54% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 36, which means that the company has a financing structure that is riskier than 64% 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 92, Suncorp is better than 92% 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 87), and professional market sentiment is positive (Sentiment Rank of 100), but value and safety are below average. The Safety Rank is the least important 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 one minus the growth rank, that is the minimum level that the value rank should have. 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 (even though it is lower than 50). Sometimes market sentiment just extrapolates the past, but sometimes they are right. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Suncorp very positive
ANALYSIS: With an Obermatt Sentiment Rank of 100 (better than 100% compared with alternatives) for 2022, overall professional sentiment and engagement for the stock Suncorp is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Suncorp. Analyst Opinions are at a rank of 91 (better than 91% 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 69, 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 Suncorp. The Professional Investors rank is 96, which means that currently, professional investors hold more stock in this company than in 96% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 59 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 59% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 100 (more positive than 100% compared with investment alternatives), Suncorp 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 Suncorp 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: Suncorp Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 46 (worse than 54% compared with alternatives), Suncorp 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 Suncorp. Price-to-Sales (P/S) has a value of 68, which means that the stock price compared with what market professionals expect for future sales is lower than 68% of comparable companies, indicating a good value concerning Suncorp's revenue size. The same is valid for dividend yields with an Obermatt Dividend Yield rank of 72, which means that dividends are expected to be higher than 72% of comparable investments. On the other hand, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 57% of alternatives (only 43% of peers have an even higher ratio). The same is valid for Price-to-Profit (or Price / Earnings, P/E), which is higher than 70% 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 46, is a HOLD recommendation based on Suncorp'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: Suncorp Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 87 (better than 87% compared with alternatives) for 2022, Suncorp 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 half of the indicators below and half above average for Suncorp. Profit Growth has a rank of 92, which means that currently professionals expect the company to grow its profits more than 92% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 81 (above 81% of alternative investments). But Sales Growth has a below the median rank of 37, which means that, currently, professionals expect the company to grow less than 63% of its competitors, and Capital Growth also has a lower rank of 37. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 87, is a BUY recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Suncorp. ...read more
Safety Strategy: Suncorp Debt Financing Safety below-average
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 16 |
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| REFINANCING | ||||||||
| REFINANCING | 64 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 55 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 36 |
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ANALYSIS: With an Obermatt Safety Rank of 36 (better than 36% compared with alternatives), the company Suncorp 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 Suncorp 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 two out of three indicators above-average for Suncorp. Refinancing is at 64, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 64% of its competitors. Liquidity is also good at 55, meaning the company generates more profit to service its debt than 55% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 16, which means the company has an above-average debt-to-equity ratio. It has more debt than 84% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 36 (worse than 64% compared with alternatives), Suncorp has a financing structure that is riskier than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Suncorp could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Suncorp Top Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 46 |
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| GROWTH | ||||||||
| GROWTH | 87 |
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| SAFETY | ||||||||
| SAFETY | 55 |
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| COMBINED | ||||||||
| COMBINED | 82 |
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ANALYSIS: With an Obermatt Combined Rank of 82 (better than 82% compared with investment alternatives), Suncorp (Property & Casualty Insurance, Australia) shares have much better financial characteristics than comparable stocks. Shares of Suncorp are low in value (priced high) with a consolidated Obermatt Value Rank of 46 (worse than 54% of alternatives), and are riskily financed (Safety Rank of 36, which means above-average debt burdens) but show above-average growth (Growth Rank of 87). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 82, is a strong buy recommendation based on Suncorp's financial characteristics. As the company Suncorp shows low value with an Obermatt Value Rank of 46 (54% 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 87% of comparable companies (Obermatt Growth Rank is 87). This is a typical case. Companies with above average growth tend to cost more than the sluggish variety. If this is a high-growth company, the low Obermatt Safety Rank of 36 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 Suncorp, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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