May 11, 2023
Top 10 Stock Heineken 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: Heineken – Top 10 Stock in AEX Index
Heineken is listed as a top 10 stock on May 11, 2023 in the market index AEX 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° Rank of 56 (high 56% performer), Obermatt assesses an overall buy recommendation for Heineken on May 11, 2023.
Snapshot: Obermatt Ranks
| Country | Netherlands |
| Industry | Brewers |
| Index | AEX, Human Rights |
| Size class | XX-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 Heineken Buy
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 28 |
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| GROWTH | ||||||||
| GROWTH | 67 |
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| SAFETY | ||||||||
| SAFETY | 28 |
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| SENTIMENT | ||||||||
| SENTIMENT | 74 |
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| 360° VIEW | ||||||||
| 360° VIEW | 56 |
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ANALYSIS: With an Obermatt 360° Rank of 56 (better than 56% compared with alternatives), overall professional sentiment and engagement for the stock Heineken are above average. The 360° Rank is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Heineken. The consolidated Growth Rank has a good rank of 67, 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 67% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 74, which means that professional investors are more optimistic about the stock than for 74% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 28, which means that the share price of Heineken 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 28, which means that the company has a financing structure that is riskier than 72% 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° Rank of 56, Heineken is better than 56% 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 67), and professional market sentiment is positive (Sentiment Rank of 74), 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 Heineken positive
ANALYSIS: With an Obermatt Sentiment Rank of 74 (better than 74% compared with alternatives), overall professional sentiment and engagement for the stock Heineken is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Heineken. Analyst Opinions are at a rank of 47 (worse than 53% 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 50, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Heineken. Even better, the Professional Investors rank is 65, meaning that professional investors hold more stock in this company than in 65% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 79, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 79% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 74 (more positive than 74% compared with investment alternatives), Heineken has a reputation among professional investors that is above-average compared with 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: Heineken Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 28 (worse than 72% compared with alternatives), Heineken shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Heineken. Price-to-Sales has a value of 22 which means that the stock price compared with what market professionals expect for future profits is higher than 78% of comparable companies, indicating a low value concerning Heineken's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Obermatt Price-to-Book Rank of 31, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Heineken. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 30 and Dividend Yield, which is lower than 71% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 28, is a HOLD recommendation based on Heineken's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Heineken? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for new and exciting products where everybody wants a piece of the action. Should you pay a lot for a hot stock such as Heineken? It's risky, and even if it continues to grow because of popular demand, it will most likely return to what it's worth. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is reasonable for the company to dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Heineken may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Heineken Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 67 (better than 67% compared with alternatives), Heineken shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Heineken. Sales Growth has a rank of 84 which means that currently, professionals expect the company to grow more than 84% of its competitors. Both Profit Growth, with a rank of 56, and Stock Returns, with a rank of 75, are also above average. But Capital Growth only has a rank of 18, which means that, currently, professionals expect the company to grow its invested capital less than 44% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 67, is a BUY recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: Heineken Debt Financing Safety below-average
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 33 |
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| REFINANCING | ||||||||
| REFINANCING | 14 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 48 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 28 |
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ANALYSIS: With an Obermatt Safety Rank of 28 (better than 28% compared with alternatives), the company Heineken 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 Heineken 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 all three metrics below average for Heineken. Liquidity is at 48, meaning that the company generates less profit to service its debt than 52% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 33, meaning the company has an above-average debt-to-equity ratio. It has more debt than 67% of its competitors. Finally, Refinancing is at a rank of 14 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 86% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 28 (worse than 72% compared with alternatives), Heineken has a financing structure that is riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing. ...read more
Combined financial peformance: Heineken Below-Average Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 28 |
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| GROWTH | ||||||||
| GROWTH | 67 |
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| SAFETY | ||||||||
| SAFETY | 48 |
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| COMBINED | ||||||||
| COMBINED | 36 |
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ANALYSIS: With an Obermatt Combined Rank of 36 (worse than 64% compared with investment alternatives), Heineken (Brewers, Netherlands) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Heineken 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 28, which means above-average debt burdens) but show above-average growth (Growth Rank of 67). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 36, is a hold recommendation based on Heineken's financial characteristics. As the company Heineken 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 67% of comparable companies (Obermatt Growth Rank is 67). 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 28 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 Heineken, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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