August 17, 2023
Top 10 Stock Weg 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: Weg – Top 10 Stock in Bolsa de Valores-Mercadorias | BOVESPA
Weg is listed as a top 10 stock on August 17, 2023 in the market index BOVESPA because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and 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 69 (high 69% performer), Obermatt assesses an overall buy recommendation for Weg on August 17, 2023.
Snapshot: Obermatt Ranks
| Country | Brazil |
| Industry | Electr. Components & Equipment |
| Index | BOVESPA, Independent Boards Growth Markets |
| 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 Weg Buy
| 360 METRICS | August 17, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 26 |
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| GROWTH | ||||||||
| GROWTH | 84 |
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| SAFETY | ||||||||
| SAFETY | 45 |
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| SENTIMENT | ||||||||
| SENTIMENT | 88 |
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| 360° VIEW | ||||||||
| 360° VIEW | 69 |
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ANALYSIS: With an Obermatt 360° View of 69 (better than 69% compared with alternatives), overall professional sentiment and financial characteristics for the stock Weg are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Weg. The consolidated Growth Rank has a good rank of 84, 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. This means that growth is higher than for 84% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 88, which means that professional investors are more optimistic about the stock than for 88% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 26, which means that the share price of Weg is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 74% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 45, which means that the company has a financing structure that is riskier than those of 55% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 69, Weg is better positioned than 69% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 84), and professional market sentiment is positive (Sentiment Rank of 88), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value 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 if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Weg very positive
ANALYSIS: With an Obermatt Sentiment Rank of 88 (better than 88% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Weg is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Weg. Analyst Opinions are at a rank of 45 (worse than 55% 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 55, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Weg. Even better, the Professional Investors rank is 100, meaning that professional investors hold more stock in this company than in 100% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 78, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 78% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 88 (more positive than 88% compared with investment alternatives), Weg 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: Weg Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 26 (worse than 74% compared with alternatives), Weg 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 Weg. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 57% 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 26 which means that the stock price compared with what market professionals expect for future profits is higher than 74% of comparable companies, indicating a low value concerning Weg's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 39 which means that the stock price compared with what market professionals expect for future profit levels is higher than 61% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 18 is also low. Compared with invested capital, the stock price is higher than for 82% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 26, is a hold recommendation based on Weg's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Weg? 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 Weg only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Weg Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 84 (better than 84% compared with alternatives) for 2023, Weg 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 Weg. Sales Growth has a value of 69, which means that, currently, professionals expect the company to grow more than 69% of its competitors. The same is valid for Profit Growth with a value of 77 and for Capital Growth with 61. In addition, Stock Returns had an above-average rank value of 73, which means they have been higher than 73% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 84, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Weg 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: Weg Debt Financing Safety below-average
| SAFETY METRICS | August 17, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 50 |
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| REFINANCING | ||||||||
| REFINANCING | 27 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 76 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 45 |
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ANALYSIS: With an Obermatt Safety Rank of 45 (better than 45% compared with alternatives), the company Weg has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Weg 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 two out of three indicators above average for Weg. Leverage is at a rank of 50, meaning the company has a below-average debt-to-equity ratio. It has less debt than 50% of its competitors. Liquidity is also good at a rank of 76, meaning the company generates more profit to service its debt than 76% 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 27, 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 73% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 45 (worse than 55% compared with alternatives), Weg has a financing structure that is riskier 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 Weg. 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: Weg Below-Average Financial Performance
| COMBINED PERFORMANCE | August 17, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 26 |
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| GROWTH | ||||||||
| GROWTH | 84 |
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| SAFETY | ||||||||
| SAFETY | 76 |
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| COMBINED | ||||||||
| COMBINED | 43 |
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ANALYSIS: With an Obermatt Combined Rank of 43 (worse than 57% compared with investment alternatives), Weg (Electr. Components & Equipment, Brazil) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Weg are low in value (priced high) with a consolidated Value Rank of 26 (worse than 74% of alternatives), and are riskily financed (Safety Rank of 45, which means above-average debt burdens) but show above-average growth (Growth Rank of 84). ...read more
RECOMMENDATION: A Combined Rank of 43, is a hold recommendation based on Weg's financial characteristics. As the company Weg shows low value with an Obermatt Value Rank of 26 (74% 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 84% of comparable companies (Obermatt Growth Rank is 84). 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 45 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 Weg, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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