October 26, 2023
Top 10 Stock AppLovin Strong 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: AppLovin – Top 10 Stock in Nasdaq Composite Index
AppLovin is listed as a top 10 stock on October 26, 2023 in the market index NASDAQ because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 94 (top 94% performer), Obermatt assesses an overall strong buy recommendation for AppLovin on October 26, 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 AppLovin Strong Buy
| 360 METRICS | October 26, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 32 |
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| GROWTH | ||||||||
| GROWTH | 100 |
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| SAFETY | ||||||||
| SAFETY | 51 |
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| SENTIMENT | ||||||||
| SENTIMENT | 85 |
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| 360° VIEW | ||||||||
| 360° VIEW | 94 |
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ANALYSIS: With an Obermatt 360° View of 94 (better than 94% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock AppLovin are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for AppLovin. The consolidated Growth Rank has a good rank of 100, 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 100% of competitors in the same industry. The consolidated Safety Rank at 51 means that the company has a financing structure that is safer than 51% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 85, which means that professional investors are more optimistic about the stock than for 85% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 32, meaning that the share price of AppLovin is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 68% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 94, AppLovin is better positioned than 94% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 100), a safe financing structure (Safety Rank of 51), and positive professional market sentiment (Sentiment Rank of 85), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. 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 more do you pay for the stock of AppLovin compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (100% better than peers). The value rank could be the reverse reflection of that (0%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the 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 AppLovin very positive
ANALYSIS: With an Obermatt Sentiment Rank of 85 (better than 85% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock AppLovin is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for AppLovin. Analyst Opinions are at a rank of 76 (better than 76% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 82, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in AppLovin. Finally, the Professional Investors rank is 65, which means that currently, professional investors hold more stock in this company than in 65% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 85 (more positive than 85% compared with investment alternatives), AppLovin has a reputation among professional investors that is significantly higher than that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 48, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 52% of competitors). This could mean future risks and should make investors careful. Attention to negative news for AppLovin is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...read more
Value Strategy: AppLovin Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 32 (worse than 68% compared with alternatives), AppLovin 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 AppLovin. Price-to-Sales (P/S) is 59, which means that the stock price compared with what market professionals expect for future sales is lower than 59% of comparable companies, indicating a good value concerning to AppLovin's revenue size. But all other performance indicators point in a different direction. Dividend yields have a Dividend Yield rank of 1, meaning that dividends are expected to be lower than for 99% of comparable investments. Furthermore, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 66% of alternatives (only 34% 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 61% 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 32, is a hold recommendation based on AppLovin'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 AppLovin 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, AppLovin looks like an expensive investment today. ...read more
Growth Strategy: AppLovin Growth Momentum high
| GROWTH METRICS | October 26, 2023 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 67 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 94 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 85 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 100 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 100 |
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ANALYSIS: With an Obermatt Growth Rank of 100 (better than 100% compared with alternatives) for 2023, AppLovin 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 AppLovin. Sales Growth has a value of 67, which means that, currently, professionals expect the company to grow more than 67% of its competitors. The same is valid for Profit Growth with a value of 94 and for Capital Growth with 85. In addition, Stock Returns had an above-average rank value of 100, which means they have been higher than 100% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 100, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, AppLovin 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: AppLovin Debt Financing Safety above-average
| SAFETY METRICS | October 26, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 16 |
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| REFINANCING | ||||||||
| REFINANCING | 61 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 54 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 51 |
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ANALYSIS: With an Obermatt Safety Rank of 51 (better than 51% compared with alternatives), the company AppLovin 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 AppLovin 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 AppLovin. Refinancing is at 61, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 61% of its competitors. Liquidity is also good at 54, meaning the company generates more profit to service its debt than 54% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 16, which means the company has an above-average debt-to-equity ratio. It has more debt than 84% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 51 (better than 51% compared with alternatives), AppLovin has a financing structure that is 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 AppLovin 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: AppLovin Top Financial Performance
| COMBINED PERFORMANCE | October 26, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 32 |
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| GROWTH | ||||||||
| GROWTH | 100 |
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| SAFETY | ||||||||
| SAFETY | 54 |
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| COMBINED | ||||||||
| COMBINED | 80 |
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ANALYSIS: With an Obermatt Combined Rank of 80 (better than 80% compared with investment alternatives), AppLovin (Application Software, USA) shares have much better financial characteristics than comparable stocks. Shares of AppLovin are low in value (priced high) with a consolidated Value Rank of 32 (worse than 68% of alternatives). But they show above-average growth (Growth Rank of 100) and are safely financed (Safety Rank of 51, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 80, is a strong buy recommendation based on AppLovin's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company AppLovin exhibits low value (Obermatt Value Rank of 32), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 100). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 51) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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