September 26, 2024
Top 10 Stock Tata Consultancy Services Hold Recommendation

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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 Consultancy Services Hold

360 METRICS	September 26, 2024
VALUE
VALUE	33
GROWTH
GROWTH	39
SAFETY
SAFETY	59
SENTIMENT
SENTIMENT	56
360° VIEW
360° VIEW	42

ANALYSIS: With an Obermatt 360° View of 42 (better than 42% compared with alternatives), overall professional sentiment and financial characteristics for the stock Tata Consultancy Services are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Tata Consultancy Services. The consolidated Sentiment Rank has a good rank of 56, which means that professional investors are more optimistic about the stock than for 56% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 59 or better than 59% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 33, meaning that the share price of Tata Consultancy Services is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 39. ...read more

RECOMMENDATION: With a consolidated 360° View of 42, Tata Consultancy Services is worse than 58% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 56) and safe financing practices (Safety Rank of 59), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of Tata Consultancy Serviceṣ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more

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Sentiment Strategy: Professional Market Sentiment for Tata Consultancy Services positive

SENTIMENT METRICS	September 26, 2024
ANALYST OPINION
ANALYST OPINION	41
OPINIONS CHANGE
OPINIONS CHANGE	52
PRO HOLDINGS
PRO HOLDINGS	74
MARKET PULSE
MARKET PULSE	51
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	56

ANALYSIS: With an Obermatt Sentiment Rank of 56 (better than 56% compared with alternatives), overall professional sentiment and engagement for the stock Tata Consultancy Services is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Tata Consultancy Services. Analyst Opinions are at a rank of 41 (worse than 59% 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 52, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Tata Consultancy Services. Even better, the Professional Investors rank is 74, meaning that professional investors hold more stock in this company than in 74% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 51, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 51% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 56 (more positive than 56% compared with investment alternatives), Tata Consultancy Services has a reputation among professional investors that is above-average compared with 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

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Value Strategy: Tata Consultancy Services Stock Price Value below-average critical

VALUE METRICS	September 26, 2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	29
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	41
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	7
DIVIDEND YIELD
DIVIDEND YIELD	70
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	33

ANALYSIS: With an Obermatt Value Rank of 33 (worse than 67% compared with alternatives), Tata Consultancy Services shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Tata Consultancy Services. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 70% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 29 which means that the stock price compared with what market professionals expect for future profits is higher than 71% of comparable companies, indicating a low value concerning Tata Consultancy Services's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 41 which means that the stock price compared with what market professionals expect for future profit levels is higher than 59% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 7 is also low. Compared with invested capital, the stock price is higher than for 93% of comparable investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 33, is a hold recommendation based on Tata Consultancy Services's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Tata Consultancy Services? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Tata Consultancy Services only if they reasonably expect the low current profit levels to be transitory. ...read more

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Growth Strategy: Tata Consultancy Services Growth Momentum low

GROWTH METRICS	September 26, 2024
REVENUE GROWTH
REVENUE GROWTH	30
PROFIT GROWTH
PROFIT GROWTH	47
CAPITAL GROWTH
CAPITAL GROWTH	43
STOCK RETURNS
STOCK RETURNS	59
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	39

ANALYSIS: With an Obermatt Growth Rank of 39 (better than 39% compared with alternatives), Tata Consultancy Services shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Tata Consultancy Services. Sales Growth has a below market rank of 30, which means that, currently, professionals expect the company to grow less than 70% of its competitors. The same is valid for Capital Growth, with a rank of 43, and Profit Growth, with a rank of 47. Currently, professionals expect the company to grow its profits less than 53% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 59, which means that the stock returns have recently been above 59% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 39, is a hold recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Tata Consultancy Services, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more

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Safety Strategy: Tata Consultancy Services Debt Financing Safety above-average

SAFETY METRICS	September 26, 2024
LEVERAGE
LEVERAGE	64
REFINANCING
REFINANCING	25
LIQUIDITY
LIQUIDITY	86
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	59

ANALYSIS: With an Obermatt Safety Rank of 59 (better than 59% compared with alternatives), the company Tata Consultancy Services has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Tata Consultancy Services is safe, it only means that the company is on the safer side regarding possible bankruptcy, 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 Tata Consultancy Services. Leverage is at a rank of 64, meaning the company has a below-average debt-to-equity ratio. It has less debt than 64% of its competitors. Liquidity is also good at a rank of 86, meaning the company generates more profit to service its debt than 86% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 25, 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 75% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 59 (better than 59% compared with alternatives), Tata Consultancy Services has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Tata Consultancy Services. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more

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Combined financial peformance: Tata Consultancy Services Below-Average Financial Performance

COMBINED PERFORMANCE	September 26, 2024
VALUE
VALUE	33
GROWTH
GROWTH	39
SAFETY
SAFETY	86
COMBINED
COMBINED	30

ANALYSIS: With an Obermatt Combined Rank of 30 (worse than 70% compared with investment alternatives), Tata Consultancy Services (IT Consulting & oth. Services, India) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Tata Consultancy Services are low in value (priced high) with a consolidated Value Rank of 33 (worse than 67% of alternatives) and show below-average growth (Growth Rank of 39) but are safely financed (Safety Rank of 59), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 30, is a hold recommendation based on Tata Consultancy Services's financial characteristics. As the company Tata Consultancy Services's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 33) and low growth (Obermatt Growth Rank of 39), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 59) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more

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