March 7, 2024
Top 10 Stock Toromont Buy 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: Toromont – Top 10 Stock in Toronto Stock Exchange Index TSX Composite
Toromont is listed as a top 10 stock on March 07, 2024 in the market index TSX Composite because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 74 (high 74% performer), Obermatt assesses an overall buy recommendation for Toromont on March 07, 2024.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | Trading & Distribution |
| Index | TSX Composite |
| 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 Toromont Buy
| 360 METRICS | March 7, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 27 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 30 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 73 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 100 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 74 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 74 (better than 74% compared with alternatives), overall professional sentiment and financial characteristics for the stock Toromont are above average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Toromont. The consolidated Sentiment Rank has a good rank of 100, which means that professional investors are more optimistic about the stock than for 100% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 73 or better than 73% 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 27, meaning that the share price of Toromont 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 30. ...read more
RECOMMENDATION: With a consolidated 360° View of 74, Toromont is better positioned than 74% 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 100) and safe financing practices (Safety Rank of 73), 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 Toromonṭ 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
Sentiment Strategy: Professional Market Sentiment for Toromont very positive
ANALYSIS: With an Obermatt Sentiment Rank of 100 (better than 100% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Toromont is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Toromont. Analyst Opinions are at a rank of 48 (worse than 52% 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 97, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Toromont. Even better, the Professional Investors rank is 98, meaning that professional investors hold more stock in this company than in 98% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 91, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 91% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 100 (more positive than 100% compared with investment alternatives), Toromont has a reputation among professional investors that is significantly higher than 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
Value Strategy: Toromont Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 27 (worse than 73% compared with alternatives), Toromont 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 Toromont. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 65% 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 25 which means that the stock price compared with what market professionals expect for future profits is higher than 75% of comparable companies, indicating a low value concerning Toromont's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 31 which means that the stock price compared with what market professionals expect for future profit levels is higher than 69% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 44 is also low. Compared with invested capital, the stock price is higher than for 56% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 27, is a hold recommendation based on Toromont's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Toromont? 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 Toromont only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Toromont Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 30 (better than 30% compared with alternatives), Toromont 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 Toromont. Only Capital Growth has a good rank of 62, which means that currently professionals expect the company to grow its invested capital more than 47% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 38 which means that currently professionals expect the company to grow less than 62% of its competitors. Profit Growth with a rank of 47 and Stock Returns with a rank of 35 are also low (below 65% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 30, is a hold recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Toromont is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more
Safety Strategy: Toromont Debt Financing Safety above-average
| SAFETY METRICS | March 7, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 74 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 43 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 79 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 73 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 73 (better than 73% compared with alternatives), the company Toromont 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 Toromont 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 Toromont. Leverage is at a rank of 74, meaning the company has a below-average debt-to-equity ratio. It has less debt than 74% of its competitors. Liquidity is also good at a rank of 79, meaning the company generates more profit to service its debt than 79% 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 43, 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 57% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 73 (better than 73% compared with alternatives), Toromont 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 Toromont. 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
Combined financial peformance: Toromont Below-Average Financial Performance
| COMBINED PERFORMANCE | March 7, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 27 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 30 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 79 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 30 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 30 (worse than 70% compared with investment alternatives), Toromont (Trading & Distribution, Canada) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Toromont are low in value (priced high) with a consolidated Value Rank of 27 (worse than 73% of alternatives) and show below-average growth (Growth Rank of 30) but are safely financed (Safety Rank of 73), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 30, is a hold recommendation based on Toromont's financial characteristics. As the company Toromont's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 27) and low growth (Obermatt Growth Rank of 30), 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 73) 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
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.