September 28, 2023
Top 10 Stock Alcon 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: Alcon – Top 10 Stock in Swiss Market Index SMI
Alcon is listed as a top 10 stock on September 28, 2023 in the market index SMI 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 46 (46% performer), Obermatt assesses an overall hold recommendation for Alcon on September 28, 2023.
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 Alcon Hold
| 360 METRICS | September 28, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 29 |
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| GROWTH | ||||||||
| GROWTH | 71 |
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| SAFETY | ||||||||
| SAFETY | 33 |
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| SENTIMENT | ||||||||
| SENTIMENT | 69 |
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| 360° VIEW | ||||||||
| 360° VIEW | 46 |
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ANALYSIS: With an Obermatt 360° View of 46 (better than 46% compared with alternatives), overall professional sentiment and financial characteristics for the stock Alcon are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Alcon. The consolidated Growth Rank has a good rank of 71, 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 71% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 69, which means that professional investors are more optimistic about the stock than for 69% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 29, which means that the share price of Alcon 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 71% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 33, which means that the company has a financing structure that is riskier than those of 67% 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 46, Alcon is worse than 54% 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 71), and professional market sentiment is positive (Sentiment Rank of 69), 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 Alcon positive
ANALYSIS: With an Obermatt Sentiment Rank of 69 (better than 69% compared with alternatives), overall professional sentiment and engagement for the stock Alcon is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Alcon. Analyst Opinions are at a rank of 71 (better than 71% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 50, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Alcon. The Professional Investors rank is 60, which means that currently, professional investors hold more stock in this company than in 60% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 54 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 54% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 69 (more positive than 69% compared with investment alternatives), Alcon has a reputation among professional investors that is above-average compared with that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Alcon stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: Alcon Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 29 (worse than 71% compared with alternatives), Alcon shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators where three out of four are below average for Alcon. Only the Price-to-Book Capital ratio (also referred to as market-to-book ratio) indicates good stock value with a Price-to-Book Rank of 65, which means that the stock price is lower compared with invested capital than for 65% of comparable investments. All other value indicators are below the market median. Price-to-Sales is 24 which means the stock price compared with what market professionals expect for future profits is higher than 76% of comparable companies, indicating a low value concerning Alcon's revenue levels. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Book Rank of 65 and for the dividend yields rank which is lower than for 72% of comparable companies, making the stock more expensive as regards to with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 29, is a hold recommendation based on Alcon's stock price compared with the company's operational size and dividend yields. Why are market participants paying such a high price for Alcon, where three out of four value indicators are below par? One reason could be that the company is well financed, indicated by the high book capital level, and has a promising future that is not yet visible in reported revenues and profits. That would also explain the low dividend yield because the company needs the cash to invest in its future. If investors can verify a picture in this sense, the stock may still be a good investment, even though current company-reported financials don't fully explain current stock prices. ...read more
Growth Strategy: Alcon Growth Momentum good
| GROWTH METRICS | September 28, 2023 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 27 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 71 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 62 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 73 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 71 |
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ANALYSIS: With an Obermatt Growth Rank of 71 (better than 71% compared with alternatives), Alcon shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Alcon. Profit Growth has a rank of 71 which means that currently professionals expect the company to grow its profits more than 71% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 62, and Stock Returns has a rank of 73 which means that the stock returns have recently been above 73% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 27 (73% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 71, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Alcon Debt Financing Safety below-average
| SAFETY METRICS | September 28, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 66 |
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| REFINANCING | ||||||||
| REFINANCING | 27 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 32 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 33 |
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ANALYSIS: With an Obermatt Safety Rank of 33 (better than 33% compared with alternatives), the company Alcon 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 Alcon 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 just one indicator above average for Alcon and the other two below average. Leverage is at a rank of 66 meaning the company has a below-average debt-to-equity ratio. It has less debt than 66% of its competitors.Refinancing is at a rank of 27, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 73% of its competitors. Liquidity is at a rank of 32, meaning that the company generates less profit to service its debt than 68% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 33 (worse than 67% compared with alternatives), Alcon has a financing structure that is riskier than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of Alcon are on the safer side. ...read more
Combined financial peformance: Alcon Below-Average Financial Performance
| COMBINED PERFORMANCE | September 28, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 29 |
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| GROWTH | ||||||||
| GROWTH | 71 |
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| SAFETY | ||||||||
| SAFETY | 32 |
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| COMBINED | ||||||||
| COMBINED | 27 |
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ANALYSIS: With an Obermatt Combined Rank of 27 (worse than 73% compared with investment alternatives), Alcon (Health Care Supplies, Switzerland) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Alcon are low in value (priced high) with a consolidated Value Rank of 29 (worse than 71% of alternatives), and are riskily financed (Safety Rank of 33, which means above-average debt burdens) but show above-average growth (Growth Rank of 71). ...read more
RECOMMENDATION: A Combined Rank of 27, is a hold recommendation based on Alcon's financial characteristics. As the company Alcon shows low value with an Obermatt Value Rank of 29 (71% 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 71% of comparable companies (Obermatt Growth Rank is 71). 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 33 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 Alcon, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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