September 14, 2023
Top 10 Stock CEMIG 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: CEMIG – Top 10 Stock in Solar Technology
CEMIG is listed as a top 10 stock on September 14, 2023 in the market index Solar Tech because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 89 (top 89% performer), Obermatt assesses an overall strong buy recommendation for CEMIG on September 14, 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 Strong Buy
| 360 METRICS | September 14, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 32 |
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| SAFETY | ||||||||
| SAFETY | 65 |
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| SENTIMENT | ||||||||
| SENTIMENT | 79 |
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| 360° VIEW | ||||||||
| 360° VIEW | 89 |
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ANALYSIS: With an Obermatt 360° View of 89 (better than 89% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock CEMIG are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for CEMIG. The consolidated Value Rank has an attractive rank of 100, which means that the share price of CEMIG is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 100% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 65. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 79. But the consolidated Growth Rank has a low rank of 32, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 68 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 89, CEMIG is better positioned than 89% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 100), secure financing practices (Safety Rank of 65), and positive market sentiment in the professional investor community (Sentiment Rank of 79). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 32), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of CEMIG is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for CEMIG very positive
ANALYSIS: With an Obermatt Sentiment Rank of 79 (better than 79% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock CEMIG is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for CEMIG. Analyst Opinions are at a rank of 16 (worse than 84% 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 64, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in CEMIG. Even better, the Professional Investors rank is 98, meaning that professional investors hold more stock in this company than in 98% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 66, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 66% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 79 (more positive than 79% compared with investment alternatives), CEMIG has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: CEMIG Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 100 (better than 100% 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 84 which means that the stock price compared with what market professionals expect for future sales is lower than for 84% 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 97% 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 74. Compared with other companies in the same industry, dividend yields of CEMIG are expected to be higher than for 94% of all competitors (a Dividend Yield rank of 94). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 100, 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
| GROWTH METRICS | September 14, 2023 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 52 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 41 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 20 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 51 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 32 |
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ANALYSIS: With an Obermatt Growth Rank of 32 (better than 32% 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. Sales Growth has a rank of 52 which means that currently professionals expect the company to grow more than 52% of its competitors. Stock Returns are also above average with a rank of 51. But Capital Growth has only a rank of 20, which means that currently professionals expect the company to grow its invested capital less than 80% of its competitors. Profit Growth is also low, with a rank of only 41, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 32, is a hold recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 51% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more
Safety Strategy: CEMIG Debt Financing Safety above-average
| SAFETY METRICS | September 14, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 69 |
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| REFINANCING | ||||||||
| REFINANCING | 50 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 61 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 65 |
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ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% 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, where all three are above average for CEMIG. Leverage is at 69, meaning the company has a below-average debt-to-equity ratio. It has less debt than 69% of its competitors. Refinancing is at a rank of 50, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 50% of its competitors. Finally, Liquidity is also good at a rank of 61, which means that the company generates more profit to service its debt than 61% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 65 (better than 65% compared with alternatives), CEMIG has a financing structure that is safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: CEMIG Top Financial Performance
| COMBINED PERFORMANCE | September 14, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 32 |
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| SAFETY | ||||||||
| SAFETY | 61 |
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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 100 (better than 100% of alternatives), are safely financed (Safety Rank of 65, which means low debt burdens), but show below-average growth (Growth Rank of 32). ...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 100) but low growth (Obermatt Growth Rank of 32) while being safely financed (Obermatt Safety Rank of 65), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 100% 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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