August 29, 2024
Top 10 Stock Tata Power 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 Power – Top 10 Stock in Low Waste Leaders
Tata Power is listed as a top 10 stock on August 29, 2024 in the market index Low Waste 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 19 (19% performer), Obermatt issues an overall sell recommendation for Tata Power on August 29, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Electric Utilities |
| Index | Low Emissions, Good Governace Growth Markets, Human Rights, Independent Boards Growth Markets, Low Waste, Recycling |
| Size class | X-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 Power Sell
| 360 METRICS | August 29, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 10 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 96 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 8 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 34 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 19 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 19 (better than 19% compared with alternatives), overall professional sentiment and financial characteristics for the stock Tata Power 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 Power. The consolidated Growth Rank has a good rank of 96, 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 96% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 10 means that the share price of Tata Power is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 90% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 8, which means that the company has a riskier financing structure than 92% 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 34, indicating professional investors are more pessimistic about the stock than for 66% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 19, Tata Power is worse than 81% of all alternative stock investment opportunities based on the Obermatt Method. This means that Tata Power 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 96), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 34), the company is rather risky when it comes to financing (Safety Rank of 8). The negative market view on Tata Power 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 Power 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 Power only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 34 (better than 34% compared with alternatives), overall professional sentiment and engagement for the stock Tata Power is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Tata Power. Analyst Opinions are at a rank of 18 (worse than 82% 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 means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Tata Power. More encouragingly, the Professional Investors rank is 53, which means that professional investors hold more stock in this company than in 53% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 44, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 56% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 34 (less encouraging than 66% compared with investment alternatives), Tata Power has a reputation among professional investors that is below that of its competitors. The sentiment signals are mixed for Tata Power. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: Tata Power Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 10 (worse than 90% compared with alternatives), Tata Power 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 Power. Price-to-Sales is 44 which means that the stock price compared with what market professionals expect for future profits is higher than 56% of comparable companies, indicating a low value concerning Tata Power's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 9, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Tata Power. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 9 and Dividend Yield, which is lower than 90% 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 10, is a sell recommendation based on Tata Power's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Tata Power? 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 Power? 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 Power 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 Power Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 96 (better than 96% compared with alternatives) for 2024, Tata Power 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 all four indicators above average for Tata Power. Sales Growth has a value of 75, which means that, currently, professionals expect the company to grow more than 75% of its competitors. The same is valid for Profit Growth with a value of 67 and for Capital Growth with 93. In addition, Stock Returns had an above-average rank value of 84, which means they have been higher than 84% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 96, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Tata Power exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Tata Power Debt Financing Safety risky
| SAFETY METRICS | August 29, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 41 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 8 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 22 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 8 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 8 (better than 8% compared with alternatives), the company Tata Power 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 Power 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 Tata Power. Liquidity is at 22, meaning that the company generates less profit to service its debt than 78% 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 41, meaning the company has an above-average debt-to-equity ratio. It has more debt than 59% of its competitors. Finally, Refinancing is at a rank of 8 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 92% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 8 (worse than 92% compared with alternatives), Tata Power 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: Tata Power Lowest Financial Performance
| COMBINED PERFORMANCE | August 29, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 10 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 96 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 22 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 21 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 21 (worse than 79% compared with investment alternatives), Tata Power (Electric Utilities, India) shares have lower financial characteristics compared with similar stocks. Shares of Tata Power are low in value (priced high) with a consolidated Value Rank of 10 (worse than 90% of alternatives), and are riskily financed (Safety Rank of 8, which means above-average debt burdens) but show above-average growth (Growth Rank of 96). ...read more
RECOMMENDATION: A Combined Rank of 21, is a sell recommendation based on Tata Power's financial characteristics. As the company Tata Power shows low value with an Obermatt Value Rank of 10 (90% 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 96% of comparable companies (Obermatt Growth Rank is 96). 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 8 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 Power, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.