September 14, 2023
Top 10 Stock CEZ Strong Buy Recommendation

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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 CEZ Strong Buy

360 METRICS	September 14, 2023
VALUE
VALUE	56
GROWTH
GROWTH	37
SAFETY
SAFETY	82
SENTIMENT
SENTIMENT	88
360° VIEW
360° VIEW	80

ANALYSIS: With an Obermatt 360° View of 80 (better than 80% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock CEZ are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for CEZ. The consolidated Value Rank has an attractive rank of 56, which means that the share price of CEZ 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 56% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 82. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 88. But the consolidated Growth Rank has a low rank of 37, 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. 63 of its competitors have better growth. ...read more

RECOMMENDATION: With a consolidated 360° View of 80, CEZ is better positioned than 80% 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 56), secure financing practices (Safety Rank of 82), and positive market sentiment in the professional investor community (Sentiment Rank of 88). 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 37), 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 CEZ 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

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Sentiment Strategy: Professional Market Sentiment for CEZ very positive

SENTIMENT METRICS	September 14, 2023
ANALYST OPINION
ANALYST OPINION	17
OPINIONS CHANGE
OPINIONS CHANGE	65
PRO HOLDINGS
PRO HOLDINGS	94
MARKET PULSE
MARKET PULSE	91
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	88

ANALYSIS: With an Obermatt Sentiment Rank of 88 (better than 88% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock CEZ is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for CEZ. 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 indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in CEZ. Even better, the Professional Investors rank is 94, meaning that professional investors hold more stock in this company than in 94% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 91, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 91% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 88 (more positive than 88% compared with investment alternatives), CEZ 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

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Value Strategy: CEZ Stock Price Value better than average

VALUE METRICS	September 14, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	51
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	43
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	23
DIVIDEND YIELD
DIVIDEND YIELD	92
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	56

ANALYSIS: With an Obermatt Value Rank of 56 (better than 56% compared with alternatives), CEZ shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for CEZ. Price-to-Sales (P/S) is 51, which means that the stock price compared with what market professionals expect for future sales is lower than for 51% of comparable companies, indicating a good value concerning CEZ's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 92, which means that dividends are expected to be higher than for 92% of comparable investments. On the other hand, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is less favorable than for 77% of alternatives (only 23% of peers have an even higher ratio). The same is valid for the Price-to-Profit (or Price / Earnings, P/E) ratio, which is higher than for 57% 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 56, is a buy recommendation based on CEZ's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. ...read more

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Growth Strategy: CEZ Growth Momentum low

GROWTH METRICS	September 14, 2023
REVENUE GROWTH
REVENUE GROWTH	69
PROFIT GROWTH
PROFIT GROWTH	6
CAPITAL GROWTH
CAPITAL GROWTH	45
STOCK RETURNS
STOCK RETURNS	69
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	37

ANALYSIS: With an Obermatt Growth Rank of 37 (better than 37% compared with alternatives), CEZ 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 CEZ. Sales Growth has a rank of 69 which means that currently professionals expect the company to grow more than 69% of its competitors. Stock Returns are also above average with a rank of 69. But Capital Growth has only a rank of 45, which means that currently professionals expect the company to grow its invested capital less than 55% of its competitors. Profit Growth is also low, with a rank of only 6, 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 37, 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 69% 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

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Safety Strategy: CEZ Debt Financing Safety very solid

SAFETY METRICS	September 14, 2023
LEVERAGE
LEVERAGE	78
REFINANCING
REFINANCING	47
LIQUIDITY
LIQUIDITY	82
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	82

ANALYSIS: With an Obermatt Safety Rank of 82 (better than 82% compared with alternatives) for 2023, the company CEZ has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of CEZ 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 CEZ. Leverage is at a rank of 78, meaning the company has a below-average debt-to-equity ratio. It has less debt than 78% of its competitors. Liquidity is also good at a rank of 82, meaning the company generates more profit to service its debt than 82% 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 47, 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 53% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 82 (better than 82% compared with alternatives), CEZ has a financing structure that is significantly 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 CEZ. 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

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Combined financial peformance: CEZ Above-Average Financial Performance

COMBINED PERFORMANCE	September 14, 2023
VALUE
VALUE	56
GROWTH
GROWTH	37
SAFETY
SAFETY	82
COMBINED
COMBINED	65

ANALYSIS: With an Obermatt Combined Rank of 65 (better than 65% compared with investment alternatives), CEZ (Electric Utilities, Czech Republic) shares have above-average financial characteristics compared with similar stocks. Shares of CEZ are a good value (attractively priced) with a consolidated Value Rank of 56 (better than 56% of alternatives), are safely financed (Safety Rank of 82, which means low debt burdens), but show below-average growth (Growth Rank of 37). ...read more

RECOMMENDATION: A Combined Rank of 65, is a buy recommendation based on CEZ's financial characteristics. As the company CEZ's key financial metrics exhibit good value (Obermatt Value Rank of 56) but low growth (Obermatt Growth Rank of 37) while being safely financed (Obermatt Safety Rank of 82), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 56% 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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