October 24, 2024
Top 10 Stock Westpac Banking Hold 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: Westpac Banking – Top 10 Stock in New Zealand Stock Exchange Index NZSX 50
Westpac Banking is listed as a top 10 stock on October 24, 2024 in the market index NZSX 50 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 safely financed, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 30 (30% performer), Obermatt assesses an overall hold recommendation for Westpac Banking on October 24, 2024.
Snapshot: Obermatt Ranks
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 Westpac Banking Hold
| 360 METRICS | October 24, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 23 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 43 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 82 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 23 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 30 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 30 (better than 30% compared with alternatives), overall professional sentiment and financial characteristics for the stock Westpac Banking are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four metrics below average for Westpac Banking. The only rank that is above average is the consolidated Safety Rank at 82, which means that the company has a financing structure that is safer than those of 82% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the Value, Growth and Sentiment Ranks are all below average. The consolidated Value Rank has a less desirable rank of 23, which means that the share price of Westpac Banking is on the high side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 43, which implies that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. Finally, the consolidated Sentiment Rank is also low at a rank of 23, which means that professional investors are more pessimistic about the stock than for 77% of alternative investment opportunities. While Safety is strong, it’s not the most critical indicator, so we suggest proceeding with caution if you are considering this stock. ...read more
RECOMMENDATION: With a consolidated 360° View of 30, Westpac Banking is worse than 70% of all alternative stock investment opportunities based on the Obermatt Method. As only the financing structure, namely the Safety Rank, is on the safer side and all other consolidated Obermatt Ranks are below-average, this is a riskier stock investment proposition. This is especially the case, since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 23. The negative market view on Westpac Banking may be the high stock price (low value) or the low level of growth. This is a problem. As the Safety Rank is the least significant of the four consolidated Obermatt Ranks, we cannot identify enough positive facts that are visible today to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not visible from investor behavior today. 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. 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 Westpac Banking negative
ANALYSIS: With an Obermatt Sentiment Rank of 23 (better than 23% compared with alternatives), overall professional sentiment and engagement for the stock Westpac Banking is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Westpac Banking. Analyst Opinions are at a rank of 7 (worse than 93% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 46, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 59, which means that professional investors hold more stock in this company than in 59% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 52, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 52% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Westpac Banking and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 23 (less encouraging than 77% compared with investment alternatives), Westpac Banking has a reputation among professional investors that is far below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Westpac Banking Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 23 (worse than 77% compared with alternatives), Westpac Banking shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Westpac Banking. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 76% 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 31 which means that the stock price compared with what market professionals expect for future profits is higher than 69% of comparable companies, indicating a low value concerning Westpac Banking's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 20 which means that the stock price compared with what market professionals expect for future profit levels is higher than 80% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 24 is also low. Compared with invested capital, the stock price is higher than for 76% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 23, is a sell recommendation based on Westpac Banking's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Westpac Banking? 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 Westpac Banking only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Westpac Banking Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 43 (better than 43% compared with alternatives), Westpac Banking 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 Westpac Banking. Sales Growth has a below market rank of 43, which means that, currently, professionals expect the company to grow less than 57% of its competitors. The same is valid for Capital Growth, with a rank of 37, and Profit Growth, with a rank of 9. Currently, professionals expect the company to grow its profits less than 91% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 99, which means that the stock returns have recently been above 99% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 43, 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 Westpac Banking, 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
Safety Strategy: Westpac Banking Debt Financing Safety very solid
| SAFETY METRICS | October 24, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 24 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 97 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 83 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 82 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 82 (better than 82% compared with alternatives) for 2024, the company Westpac Banking has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Westpac Banking 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 Westpac Banking. Refinancing is at 97, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 97% of its competitors. Liquidity is also good at 83, meaning the company generates more profit to service its debt than 83% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 24, which means the company has an above-average debt-to-equity ratio. It has more debt than 76% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 82 (better than 82% compared with alternatives), Westpac Banking has a financing structure that is significantly safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Westpac Banking could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Westpac Banking Below-Average Financial Performance
| COMBINED PERFORMANCE | October 24, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 23 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 43 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 83 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 48 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 48 (worse than 52% compared with investment alternatives), Westpac Banking (Diversified Banks, Australia) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Westpac Banking are low in value (priced high) with a consolidated Value Rank of 23 (worse than 77% of alternatives) and show below-average growth (Growth Rank of 43) but are safely financed (Safety Rank of 82), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 48, is a hold recommendation based on Westpac Banking's financial characteristics. As the company Westpac Banking's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 23) and low growth (Obermatt Growth Rank of 43), 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 82) 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.