October 31, 2024
Top 10 Stock Tata Communications 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: Tata Communications – Top 10 Stock in Real Estate in Growth Markets
Tata Communications is listed as a top 10 stock on October 31, 2024 in the market index R/E Growth Markets because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 4 (4% performer), Obermatt issues an overall sell recommendation for Tata Communications on October 31, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Integrated Telecommunication |
| Index | Good Governace Growth Markets, Independent Boards Growth Markets, R/E Growth Markets, Telecommunications |
| 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 Tata Communications Sell
| 360 METRICS | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 7 |
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| GROWTH | ||||||||
| GROWTH | 77 |
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| SAFETY | ||||||||
| SAFETY | 24 |
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| SENTIMENT | ||||||||
| SENTIMENT | 3 |
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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 Tata Communications are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Tata Communications. The consolidated Growth Rank has a good rank of 77, 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. It ranks higher than 77% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 7 means that the share price of Tata Communications is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 93% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 24, which means that the company has a riskier financing structure than 76% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 3, indicating professional investors are more pessimistic about the stock than for 97% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 4, Tata Communications is worse than 96% of all alternative stock investment opportunities based on the Obermatt Method. This means that Tata Communications shares are on the riskier side for investors. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 77), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 3), the company is rather risky when it comes to financing (Safety Rank of 24). The negative market view on Tata Communications may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of Tata Communications compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth rank. 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). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Tata Communications negative
ANALYSIS: With an Obermatt Sentiment Rank of 3 (better than 3% compared with alternatives), overall professional sentiment and engagement for the stock Tata Communications 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 Tata Communications. Analyst Opinions are at a rank of 11 (worse than 89% 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 11, which means that stock research experts are getting even more pessimistic. In addition, the Professional Investors rank is 16, which means that professional investors hold less stock in this company than in 84% of alternative investment opportunities. Pros tend to invest in other companies. The only positive sentiment indicator for Tata Communications is Market Pulse, with a rank of 58, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 58% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 3 (less encouraging than 97% compared with investment alternatives), Tata Communications 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: Tata Communications Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 7 (worse than 93% compared with alternatives), Tata Communications shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Tata Communications. Price-to-Sales is 34 which means that the stock price compared with what market professionals expect for future profits is higher than 66% of comparable companies, indicating a low value concerning Tata Communications's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 1, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Tata Communications. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 13 and Dividend Yield, which is lower than 82% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 7, is a sell recommendation based on Tata Communications's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Tata Communications? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Tata Communications? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Tata Communications may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Tata Communications Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 77 (better than 77% compared with alternatives) for 2024, Tata Communications 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 Tata Communications. Sales Growth has a rank of 89 which means that currently, professionals expect the company to grow more than 89% of its competitors. Capital Growth is also above 38% of competitors with a rank of 89. But Profit Growth only has a rank of 38, which means that currently professionals expect the company to grow its profits less than 62% of its competitors. And Stock Returns have also been below average with a rank of only 37. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 77, is a buy recommendation for growth and momentum investors. Profits are sometimes low if the company invests in the future. The positive revenue and capital investment outlook confirms such an interpretation. Both revenues and capital are solid growth indicators, and lower profits in such a case would be encouraging. But the investors see it differently by punishing the share price. Sometimes, Mister Market is not very reliable, because it is not uncommon for it to be volatile. Investors should look out for signs of growth expenditure that could justify low profit growth, and they may also find reasons why recent stock price developments don't confirm the growth outlook of operations. While operating growth indicators are not perfect, they are more reliable indicators for future performance than stock prices that can repeatedly surprise investors. ...read more
Safety Strategy: Tata Communications Debt Financing Safety risky
| SAFETY METRICS | October 31, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 4 |
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| REFINANCING | ||||||||
| REFINANCING | 35 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 60 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 24 |
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ANALYSIS: With an Obermatt Safety Rank of 24 (better than 24% compared with alternatives), the company Tata Communications 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 Tata Communications 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 Tata Communications. Liquidity is at 60, meaning the company generates more profit to service its debt than 60% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 35, 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 65% of its competitors. Leverage is also high at a rank of 4, which means that the company has an above-average debt-to-equity ratio. It has more debt than 96% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 24 (worse than 76% compared with alternatives), Tata Communications 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: Tata Communications Lowest Financial Performance
| COMBINED PERFORMANCE | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 7 |
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| GROWTH | ||||||||
| GROWTH | 77 |
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| SAFETY | ||||||||
| SAFETY | 60 |
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| COMBINED | ||||||||
| COMBINED | 14 |
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ANALYSIS: With an Obermatt Combined Rank of 14 (worse than 86% compared with investment alternatives), Tata Communications (Integrated Telecommunication, India) shares have lower financial characteristics compared with similar stocks. Shares of Tata Communications are low in value (priced high) with a consolidated Value Rank of 7 (worse than 93% of alternatives), and are riskily financed (Safety Rank of 24, which means above-average debt burdens) but show above-average growth (Growth Rank of 77). ...read more
RECOMMENDATION: A Combined Rank of 14, is a sell recommendation based on Tata Communications's financial characteristics. As the company Tata Communications shows low value with an Obermatt Value Rank of 7 (93% 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 77% of comparable companies (Obermatt Growth Rank is 77). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 24 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 Tata Communications, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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