July 25, 2024
Top 10 Stock Tata Steel 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 Steel – Top 10 Stock in Bombay Stock Exchange Sensitive Index BSE Sensex
Tata Steel is listed as a top 10 stock on July 25, 2024 in the market index BSE Sensex 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 14 (14% performer), Obermatt issues an overall sell recommendation for Tata Steel on July 25, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Steel |
| Index | BSE Sensex, Good Governace Growth Markets, Independent Boards Growth Markets, CNX Nifty 50 |
| Size class | XX-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 Steel Sell
| 360 METRICS | July 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 39 |
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| GROWTH | ||||||||
| GROWTH | 81 |
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| SAFETY | ||||||||
| SAFETY | 6 |
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| SENTIMENT | ||||||||
| SENTIMENT | 28 |
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| 360° VIEW | ||||||||
| 360° VIEW | 14 |
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ANALYSIS: With an Obermatt 360° View of 14 (better than 14% compared with alternatives), overall professional sentiment and financial characteristics for the stock Tata Steel 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 Steel. The consolidated Growth Rank has a good rank of 81, 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 81% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 39 means that the share price of Tata Steel is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 61% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 6, which means that the company has a riskier financing structure than 94% 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 28, indicating professional investors are more pessimistic about the stock than for 72% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 14, Tata Steel is worse than 86% of all alternative stock investment opportunities based on the Obermatt Method. This means that Tata Steel 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 81), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 28), the company is rather risky when it comes to financing (Safety Rank of 6). The negative market view on Tata Steel 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 Steel 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 Steel only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 28 (better than 28% compared with alternatives), overall professional sentiment and engagement for the stock Tata Steel 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 Steel. Analyst Opinions are at a rank of 40 (worse than 60% 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 Steel. More encouragingly, the Professional Investors rank is 51, which means that professional investors hold more stock in this company than in 51% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 16, 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 84% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 28 (less encouraging than 72% compared with investment alternatives), Tata Steel has a reputation among professional investors that is below that of its competitors. The sentiment signals are mixed for Tata Steel. 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 Steel Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 39 (worse than 61% compared with alternatives), Tata Steel shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where the majority of metrics are below, and only one is above average for Tata Steel. Price-to-Sales (P/S) is 67, which means that the stock price compared with what market professionals expect for future sales is lower than 67% of comparable companies, indicating a good value concerning to Tata Steel's revenue size. But all other performance indicators point in a different direction. Dividend yields have a Dividend Yield rank of 49, meaning that dividends are expected to be lower than for 51% of comparable investments. Furthermore, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 54% of alternatives (only 46% of peers have an even higher ratio). The same is valid for Price-to-Profit (or Price / Earnings, P/E), which is higher than for 53% 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 39, is a hold recommendation based on Tata Steel's stock price compared with the company's operational size and dividend yields. Since Price-to-Sales is a stable value indicator even in challenging times, investing in Tata Steel could be seen as a value investment. However, there must be a good reason for the low market-to-book rank. If the company has a typical capital investment practice, the stock may be overvalued because the profit and dividend-related performance indicators are also low. The stock is only good value if investors can expect profits and dividends to pick up in the future. Else, Tata Steel looks like an expensive investment today. ...read more
Growth Strategy: Tata Steel Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 81 (better than 81% compared with alternatives) for 2024, Tata Steel 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 Steel. Profit Growth has a rank of 94, which means that currently professionals expect the company to grow its profits more than 94% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 75 (above 75% of alternative investments). But Sales Growth has a below the median rank of 45, which means that, currently, professionals expect the company to grow less than 55% of its competitors, and Capital Growth also has a lower rank of 44. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 81, 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 Tata Steel. ...read more
Safety Strategy: Tata Steel Debt Financing Safety risky
| SAFETY METRICS | July 25, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 16 |
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| REFINANCING | ||||||||
| REFINANCING | 5 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 18 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 6 |
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ANALYSIS: With an Obermatt Safety Rank of 6 (better than 6% compared with alternatives), the company Tata Steel 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 Steel 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 Steel. Liquidity is at 18, meaning that the company generates less profit to service its debt than 82% 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 16, meaning the company has an above-average debt-to-equity ratio. It has more debt than 84% of its competitors. Finally, Refinancing is at a rank of 5 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 95% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 6 (worse than 94% compared with alternatives), Tata Steel 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 Steel Lowest Financial Performance
| COMBINED PERFORMANCE | July 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 39 |
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| GROWTH | ||||||||
| GROWTH | 81 |
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| SAFETY | ||||||||
| SAFETY | 18 |
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| COMBINED | ||||||||
| COMBINED | 22 |
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ANALYSIS: With an Obermatt Combined Rank of 22 (worse than 78% compared with investment alternatives), Tata Steel (Steel, India) shares have lower financial characteristics compared with similar stocks. Shares of Tata Steel are low in value (priced high) with a consolidated Value Rank of 39 (worse than 61% of alternatives), and are riskily financed (Safety Rank of 6, which means above-average debt burdens) but show above-average growth (Growth Rank of 81). ...read more
RECOMMENDATION: A Combined Rank of 22, is a sell recommendation based on Tata Steel's financial characteristics. As the company Tata Steel shows low value with an Obermatt Value Rank of 39 (61% 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 81% of comparable companies (Obermatt Growth Rank is 81). 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 6 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 Steel, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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