December 21, 2023
Top 10 Stock Heineken Hold 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 Heineken Hold

360 METRICS	December 21, 2023
VALUE
VALUE	26
GROWTH
GROWTH	45
SAFETY
SAFETY	29
SENTIMENT
SENTIMENT	90
360° VIEW
360° VIEW	43

ANALYSIS: With an Obermatt 360° View of 43 (better than 43% compared with alternatives), overall professional sentiment and financial characteristics for the stock Heineken are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Heineken. The consolidated Sentiment Rank has a good rank of 90, which means that professional investors are more optimistic about the stock than for 90% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 26, 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. The consolidated Growth Rank also has a low rank of 45, meaning that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. This means that growth is lower than for 45% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 29 which means that the company has a riskier financing structure than 71% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more

RECOMMENDATION: With a consolidated 360° View of 43, Heineken is worse than 57% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 90) is above-average, and all other consolidated Obermatt Ranks are below peers, the stock investing proposition case is rather weak. The stock price is expensive for a company of this size in this industry, visible in the below-average Value Rank. Growth is below the competition based on the Growth Rank, and the company has more debt than other companies, according to the Safety Rank. So the question becomes: How important is the Sentiment Rank when all others are below average? When it comes to growth, the low rating might be justified if growth is expected in the future and not yet reflected in current performance. This is often the case for companies with intellectual property, such as technology and pharmaceutical companies. In the early phases, these companies are expensive compared with their size and may have a lot of debt on their books, as is the case here, as seen in the low Value and Safety Ranks. Future growth may be the strongest investment rationale in this case, which is only reflected by institutional investors' opinions. You pay more than the market average for this stock and invest in a rather debt-loaded enterprise, but it may be worth it if the future of Heinekeṇ is bright. A small investment might be justified, but proceed with caution. ...read more

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Sentiment Strategy: Professional Market Sentiment for Heineken very positive

SENTIMENT METRICS	December 21, 2023
ANALYST OPINION
ANALYST OPINION	57
OPINIONS CHANGE
OPINIONS CHANGE	76
PRO HOLDINGS
PRO HOLDINGS	77
MARKET PULSE
MARKET PULSE	83
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	90

ANALYSIS: With an Obermatt Sentiment Rank of 90 (better than 90% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Heineken is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Heineken. Analyst Opinions are at a rank of 57 (better than 57% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 76, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Heineken. The Professional Investors rank is 77, which means that currently, professional investors hold more stock in this company than in 77% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 83 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 83% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 90 (more positive than 90% compared with investment alternatives), Heineken has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Heineken stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more

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Value Strategy: Heineken Stock Price Value below-average critical

VALUE METRICS	December 21, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	26
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	39
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	29
DIVIDEND YIELD
DIVIDEND YIELD	25
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	26

ANALYSIS: With an Obermatt Value Rank of 26 (worse than 74% 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 is 26 which means that the stock price compared with what market professionals expect for future profits is higher than 74% 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 Price-to-Book Rank of 29, 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 39 and Dividend Yield, which is lower than 75% 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 26, 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 companies offering new and exciting products and 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 the stock price continues to grow because of popular demand, it may return to more typical lower levels later. 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 justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially 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

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Growth Strategy: Heineken Growth Momentum low

GROWTH METRICS	December 21, 2023
REVENUE GROWTH
REVENUE GROWTH	70
PROFIT GROWTH
PROFIT GROWTH	45
CAPITAL GROWTH
CAPITAL GROWTH	24
STOCK RETURNS
STOCK RETURNS	59
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	45

ANALYSIS: With an Obermatt Growth Rank of 45 (better than 45% compared with alternatives), Heineken 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 Heineken. Sales Growth has a rank of 70 which means that currently professionals expect the company to grow more than 70% of its competitors. Stock Returns are also above average with a rank of 59. But Capital Growth has only a rank of 24, which means that currently professionals expect the company to grow its invested capital less than 76% of its competitors. Profit Growth is also low, with a rank of only 45, 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 45, 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 59% 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: Heineken Debt Financing Safety below-average

SAFETY METRICS	December 21, 2023
LEVERAGE
LEVERAGE	34
REFINANCING
REFINANCING	17
LIQUIDITY
LIQUIDITY	48
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	29

ANALYSIS: With an Obermatt Safety Rank of 29 (better than 29% 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 34, meaning the company has an above-average debt-to-equity ratio. It has more debt than 66% of its competitors. Finally, Refinancing is at a rank of 17 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 83% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 29 (worse than 71% 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.

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Combined financial peformance: Heineken Lowest Financial Performance

COMBINED PERFORMANCE	December 21, 2023
VALUE
VALUE	26
GROWTH
GROWTH	45
SAFETY
SAFETY	48
COMBINED
COMBINED	22

ANALYSIS: With an Obermatt Combined Rank of 22 (worse than 78% compared with investment alternatives), Heineken (Brewers, Netherlands) shares have lower financial characteristics compared with similar stocks. Shares of Heineken are low in value (priced high) with a consolidated Value Rank of 26 (worse than 74% of alternatives), show below-average growth (Growth Rank of 45), and are riskily financed (Safety Rank of 29), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 22, is a sell recommendation based on Heineken's financial characteristics. As the company Heineken's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 26), low growth (Obermatt Growth Rank of 45), and risky financing practices (Obermatt Safety Rank of 29), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more

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