May 25, 2023
Top 10 Stock Arconic 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: Arconic – Top 10 Stock in Employee Satisfaction Leaders in the United States
Arconic is listed as a top 10 stock on May 25, 2023 in the market index Employee Focus US 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 50 (high 50% performer), Obermatt assesses an overall buy recommendation for Arconic on May 25, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Aluminum |
| Index | Employee Focus US |
| 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° Assessment Arconic Buy
| 360 METRICS | May 25, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 28 |
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| GROWTH | ||||||||
| GROWTH | 93 |
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| SAFETY | ||||||||
| SAFETY | 34 |
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| SENTIMENT | ||||||||
| SENTIMENT | 50 |
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| 360° VIEW | ||||||||
| 360° VIEW | 50 |
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ANALYSIS: With an Obermatt 360° View of 50 (better than 50% compared with alternatives), overall professional sentiment and engagement for the stock Arconic are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Arconic. The consolidated Growth Rank has a good rank of 93, 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 93% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 50, which means that professional investors are more optimistic about the stock than for 50% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 28, which means that the share price of Arconic 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 72% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 34, which means that the company has a financing structure that is riskier than 66% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a 360° View of 50, Arconic is better than 50% 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 93), and professional market sentiment is positive (Sentiment Rank of 50), but value and safety are below average. The Safety Rank is the least important 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 one minus the growth rank, that is the minimum level that the value rank should have. 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 (even though it is lower than 50). Sometimes market sentiment just extrapolates the past, but sometimes they are right. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Arconic positive
ANALYSIS: With an Obermatt Sentiment Rank of 50 (better than 50% compared with alternatives), overall professional sentiment and engagement for the stock Arconic is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and above average for Arconic. Analyst Opinions are at a rank of 17 (worse than 83% 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 65 which means that stock research experts are changing their opinions for the better. In other words, they are getting more optimistic of stock investments in Arconic. Market Pulse is also positive with a rank of 84, which means that the current professional news and professional social networks are positive in their discussions about this company (more positive news than for 84% of competitors). Only professional investors tend to be absent with a Professional Investors rank of 45, which means that professional investors hold less stock in this company than in 55% of alternative investment opportunities. Pros tend to invest in other companies. But that could also be due to the size of the company. Professional investors tend to invest in XL and XXL companies. If the company is smaller than that, that fact alone may explain why there are fewer pros present. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 50 (more positive than 50% compared with investment alternatives), Arconic has a reputation among professional investors that is above-average compared with that of its competitors. Since analysts are getting more optimistic and the professional communication channels are positive, it may be an indication of a company that has the difficult times behind it or is getting less expensive for what they are. For medium to smaller companies, the positive sentiment indicators outshine the negative. ...read more
Value Strategy: Arconic Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 28 (worse than 72% compared with alternatives), Arconic shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half are above average for Arconic. Price-to-Sales (P/S) is 85, which means that the stock price compared with what market professionals expect for future sales is lower than for 85% of comparable companies, indicating a good value concerning Arconic's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 50% of alternatives. Finally, it is true for expected dividend yields with an Dividend Yield rank of 1 (dividends are expected to be higher than for 1% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 96% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for Arconic to 4. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 28, is a HOLD recommendation based on Arconic's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner on assets than its competitors. For instance, the company could be leasing its production facilities, or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the low Dividend Yield is also explained as such companies tend to invest their income into market development. The other good value ranks for Sales and Profits are encouraging indicators for the stock price value. ...read more
Growth Strategy: Arconic Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 93 (better than 93% compared with alternatives) for 2023, Arconic 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 but one indicator above average for Arconic. Sales Growth has a value of 79 which means that currently professionals expect the company to grow more than 79% of its competitors. Profit Growth with a value of 94 and Capital Growth with a rank of 63 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 45, which means that stock returns have recently been below 55% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 93, is a BUY recommendation for growth and momentum investors. Arconic has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for Arconic, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. ...read more
Safety Strategy: Arconic Debt Financing Safety below-average
| SAFETY METRICS | May 25, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 10 |
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| REFINANCING | ||||||||
| REFINANCING | 77 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 26 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 34 |
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ANALYSIS: With an Obermatt Safety Rank of 34 (better than 34% compared with alternatives), the company Arconic 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 Arconic 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 Arconic and the other two below average. Refinancing is at 77, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 77% of its competitors. But Leverage is high with a rank of 10, meaning the company has an above-average debt-to-equity ratio. It has more debt than 90% of its competitors. Liquidity is also on the riskier side with a rank of 26, meaning the company generates less profit to service its debt than 74% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 34 (worse than 66% compared with alternatives), Arconic has a financing structure that is riskier than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for Arconic are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making a financial decision. ...read more
Combined financial peformance: Arconic Above-Average Financial Performance
| COMBINED PERFORMANCE | May 25, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 28 |
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| GROWTH | ||||||||
| GROWTH | 93 |
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| SAFETY | ||||||||
| SAFETY | 26 |
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| COMBINED | ||||||||
| COMBINED | 54 |
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ANALYSIS: With an Obermatt Combined Rank of 54 (better than 54% compared with investment alternatives), Arconic (Aluminum, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Arconic are low in value (priced high) with a consolidated Obermatt Value Rank of 28 (worse than 72% of alternatives), and are riskily financed (Safety Rank of 34, which means above-average debt burdens) but show above-average growth (Growth Rank of 93). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 54, is a buy recommendation based on Arconic's financial characteristics. As the company Arconic shows low value with an Obermatt Value Rank of 28 (72% 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 93% of comparable companies (Obermatt Growth Rank is 93). This is a typical case. Companies with above average growth tend to cost more than the sluggish variety. If this is a high-growth company, the low Obermatt Safety Rank of 34 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 Arconic, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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