March 14, 2024
Top 10 Stock Synlait Milk 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: Synlait Milk – Top 10 Stock in New Zealand Stock Exchange Index NZSX 50
Synlait Milk is listed as a top 10 stock on March 14, 2024 in the market index NZSX 50 because of its high performance in at least one of the Obermatt investment strategies. Only the Obermatt Value Rank exhibits above-average performance, which means that the stock is seen as critical by the professional community and other financial facts are below average, conveying mixed investment signals. Based on the Obermatt 360° View of 4 (4% performer), Obermatt issues an overall sell recommendation for Synlait Milk on March 14, 2024.
Snapshot: Obermatt Ranks
| Country | New Zealand |
| Industry | Packaged Foods & Meats |
| Index | ASX 300, Low Emissions, Energy Efficient, Water Efficiency, NZSX 50 |
| 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 Synlait Milk Sell
| 360 METRICS | March 14, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 70 |
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| GROWTH | ||||||||
| GROWTH | 5 |
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| SAFETY | ||||||||
| SAFETY | 4 |
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| SENTIMENT | ||||||||
| SENTIMENT | 6 |
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| 360° VIEW | ||||||||
| 360° VIEW | 4 |
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ANALYSIS: With an Obermatt 360° View of 4 (better than 4% compared with alternatives), overall professional sentiment and financial characteristics for the stock Synlait Milk are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Synlait Milk. Only the consolidated Value Rank has an attractive rank of 70, which means that the share price of Synlait Milk is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 70% of alternative stocks in the same industry. All other consolidated ranks are below average. 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, and invested capital growth as well as stock returns. The consolidated Safety Rank has a riskier rank of 4, meaning the company has a riskier financing structure than 96% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, professionals are more pessimistic about the stock than for 94% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 6. ...read more
RECOMMENDATION: With a consolidated 360° View of 4, Synlait Milk is worse than 96% of all alternative stock investment opportunities based on the Obermatt Method. This means that Synlait Milk shares are on the riskier side for investors. Only one of the consolidated Obermatt Ranks exhibits above-average performance, namely the Value Rank at a level of 70. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 5), a riskier financing structure than the competition (Safety Rank of 4), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 6) is negative. This combination is sensitive to a crisis, because high debt levels (low safety) require growth to finance the debt burden. It’s no wonder that the investor community indicators are skeptical (low 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. We recommend evaluating whether the future of Synlait Milk is as challenging as the low price of the stock suggests. Since the professional community is pessimistic, you might need to worry about the future of Synlait Milk. Only invest if you have solid reasons to believe that the low growth is temporary and the current market sentiment is an overreaction, possibly due to reputational issues in the past. ...read more
Sentiment Strategy: Professional Market Sentiment for Synlait Milk negative
ANALYSIS: With an Obermatt Sentiment Rank of 6 (better than 6% compared with alternatives), overall professional sentiment and engagement for the stock Synlait Milk is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and half above average for Synlait Milk. 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. Worse, Analyst Opinions Change has a rank of 15, which means that stock research experts are getting even more pessimistic. In addition, the Professional Investors rank is 1, which means that professional investors hold less stock in this company than in 99% of alternative investment opportunities. Pros tend to invest in other companies. The only positive sentiment indicator for Synlait Milk is Market Pulse, with a rank of 53, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 53% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 6 (less encouraging than 94% compared with investment alternatives), Synlait Milk has a reputation among professional investors that is far below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Synlait Milk Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 70 (better than 70% compared with alternatives), Synlait Milk shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Synlait Milk. Price-to-Sales (P/S) is 100, which means that the stock price compared with what market professionals expect for future sales is lower than for 100% of comparable companies, indicating a good value regarding Synlait Milk's revenue size. The same is valid for expected Price to Profits (or Price / Earnings, P/E), more favorable than for 63% of alternatives, and it's also true for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 100. But, compared with other companies in the same industry, dividend yields are expected to be lower than average; only 1% of all competitors have even lower dividend yields than Synlait Milk (a Dividend Yield Rank of 1). 99% alternative investments in the same business provide a higher dividend yield. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 70, is a buy recommendation based on Synlait Milk's stock price compared with the company's operational size and dividend yields. The below-average dividend yield may be a good sign, as it could mean the company has more attractive investment opportunities for the generated cash than to pay it out as dividends. A low dividend yield can also indicate a growth phase. ...read more
Growth Strategy: Synlait Milk Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 5 (better than 5% compared with alternatives), Synlait Milk 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 Synlait Milk. While Sales Growth ranks at 96, professionals currently expect the company to grow more than 96% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 4, which means that, currently, professionals expect the company to grow its profits less than 96% of its competitors, and Capital Growth has a low rank of 16. Historic stock returns were also below average with a current Stock Returns rank of 1 which means that the stock returns have recently been below 99% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 5, is a sell recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. ...read more
Safety Strategy: Synlait Milk Debt Financing Safety risky
| SAFETY METRICS | March 14, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 26 |
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| REFINANCING | ||||||||
| REFINANCING | 1 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 8 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 4 |
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ANALYSIS: With an Obermatt Safety Rank of 4 (better than 4% compared with alternatives), the company Synlait Milk 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 Synlait Milk 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 Synlait Milk. Liquidity is at 8, meaning that the company generates less profit to service its debt than 92% 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 26, meaning the company has an above-average debt-to-equity ratio. It has more debt than 74% of its competitors. Finally, Refinancing is at a rank of 1 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 99% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 4 (worse than 96% compared with alternatives), Synlait Milk 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.
Combined financial peformance: Synlait Milk Lowest Financial Performance
| COMBINED PERFORMANCE | March 14, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 70 |
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| GROWTH | ||||||||
| GROWTH | 5 |
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| SAFETY | ||||||||
| SAFETY | 8 |
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| COMBINED | ||||||||
| COMBINED | 8 |
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ANALYSIS: With an Obermatt Combined Rank of 8 (worse than 92% compared with investment alternatives), Synlait Milk (Packaged Foods & Meats, New Zealand) shares have lower financial characteristics compared with similar stocks. Shares of Synlait Milk are a good value (attractively priced) with a consolidated Value Rank of 70 (better than 70% of alternatives) but show below-average growth (Growth Rank of 5), and are riskily financed (Safety Rank of 4), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 8, is a sell recommendation based on Synlait Milk's financial characteristics. As the company Synlait Milk's key financial metrics exhibit good value (Obermatt Value Rank of 70) but low growth (Obermatt Growth Rank of 5) and risky financing practices (Obermatt Safety Rank of 4), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 70% 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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