August 17, 2023
Top 10 Stock CEMIG 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: CEMIG – Top 10 Stock in Bolsa de Valores-Mercadorias | BOVESPA
CEMIG 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. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° View of 71 (high 71% performer), Obermatt assesses an overall buy recommendation for CEMIG on August 17, 2023.
Snapshot: Obermatt Ranks
| Country | Brazil |
| Industry | Electric Utilities |
| Index | BOVESPA, Low Emissions, Human Rights, Low Waste, Recycling, Solar Tech |
| 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 CEMIG Buy
| 360 METRICS | August 17, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 98 |
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| GROWTH | ||||||||
| GROWTH | 36 |
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| SAFETY | ||||||||
| SAFETY | 67 |
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| SENTIMENT | ||||||||
| SENTIMENT | 39 |
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| 360° VIEW | ||||||||
| 360° VIEW | 71 |
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ANALYSIS: With an Obermatt 360° View of 71 (better than 71% compared with alternatives), overall professional sentiment and financial characteristics for the stock CEMIG are above average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for CEMIG. The consolidated Value Rank has an attractive rank of 98, which means that the share price of CEMIG is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 98% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 67. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 39. Professional investors are more confident in 61% other stocks. The consolidated Growth Rank also has a low rank of 36, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 64 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 71, CEMIG is better positioned than 71% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 98), and the financing structure is on the safer side (Safety Rank of 67). However, sentiment in the professional investor community is below-average (Sentiment Rank of 39), as is the growth momentum for the company (Growth Rank of 36). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for CEMIG only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 39 (better than 39% compared with alternatives), overall professional sentiment and engagement for the stock CEMIG is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for CEMIG. Analyst Opinions are at a rank of 13 (worse than 87% 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 43, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 55, which means that professional investors hold more stock in this company than in 55% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 66, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 66% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to CEMIG and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 39 (less encouraging than 61% compared with investment alternatives), CEMIG has a reputation among professional investors that is 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: CEMIG Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 98 (better than 98% compared with alternatives) for 2023, CEMIG shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for CEMIG. Price-to-Sales is 83 which means that the stock price compared with what market professionals expect for future sales is lower than for 83% of comparable companies, indicating a good value for CEMIG's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 95% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 71. Compared with other companies in the same industry, dividend yields of CEMIG are expected to be higher than for 92% of all competitors (a Dividend Yield rank of 92). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 98, is a buy recommendation based on CEMIG's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in CEMIG based on its detailed value metrics.
Growth Strategy: CEMIG Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 36 (better than 36% compared with alternatives), CEMIG 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 half of the indicators below and half above average for CEMIG. Capital Growth has a rank of 63, which means that currently professionals expect the company to grow its invested capital more than 42% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 53 (above 53% of alternative investments). But Sales Growth has only a rank of 23, which means that, currently, professionals expect the company to grow less than 77% of its competitors, and Profit Growth is also low at a rank of 42. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 36, is a hold recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for CEMIG, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: CEMIG Debt Financing Safety above-average
| SAFETY METRICS | August 17, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 69 |
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| REFINANCING | ||||||||
| REFINANCING | 48 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 70 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 67 |
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ANALYSIS: With an Obermatt Safety Rank of 67 (better than 67% compared with alternatives), the company CEMIG 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 CEMIG 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 CEMIG. Leverage is at a rank of 69, meaning the company has a below-average debt-to-equity ratio. It has less debt than 69% of its competitors. Liquidity is also good at a rank of 70, meaning the company generates more profit to service its debt than 70% 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 48, 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 52% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 67 (better than 67% compared with alternatives), CEMIG has a financing structure that is safer 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 CEMIG. 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: CEMIG Top Financial Performance
| COMBINED PERFORMANCE | August 17, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 98 |
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| GROWTH | ||||||||
| GROWTH | 36 |
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| SAFETY | ||||||||
| SAFETY | 70 |
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| COMBINED | ||||||||
| COMBINED | 85 |
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ANALYSIS: With an Obermatt Combined Rank of 85 (better than 85% compared with investment alternatives), CEMIG (Electric Utilities, Brazil) shares have much better financial characteristics than comparable stocks. Shares of CEMIG are a good value (attractively priced) with a consolidated Value Rank of 98 (better than 98% of alternatives), are safely financed (Safety Rank of 67, which means low debt burdens), but show below-average growth (Growth Rank of 36). ...read more
RECOMMENDATION: A Combined Rank of 85, is a strong buy recommendation based on CEMIG's financial characteristics. As the company CEMIG's key financial metrics exhibit good value (Obermatt Value Rank of 98) but low growth (Obermatt Growth Rank of 36) while being safely financed (Obermatt Safety Rank of 67), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 98% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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