September 7, 2023
Top 10 Stock MEG Energy 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: MEG Energy – Top 10 Stock in SDG 6: Clean Water and Sanitation
MEG Energy is listed as a top 10 stock on September 07, 2023 in the market index SDG 6 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° View of 77 (top 77% performer), Obermatt assesses an overall strong buy recommendation for MEG Energy on September 07, 2023.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | Oil & Gas Production |
| Index | Low Emissions, SDG 13, SDG 3, SDG 6, SDG 8, SDG 9, Water Efficiency, TSX Composite |
| 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 MEG Energy Strong Buy
| 360 METRICS | September 7, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 46 |
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| GROWTH | ||||||||
| GROWTH | 71 |
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| SAFETY | ||||||||
| SAFETY | 42 |
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| SENTIMENT | ||||||||
| SENTIMENT | 96 |
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| 360° VIEW | ||||||||
| 360° VIEW | 77 |
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ANALYSIS: With an Obermatt 360° View of 77 (better than 77% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock MEG Energy are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for MEG Energy. The consolidated Growth Rank has a good rank of 71, 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 71% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 96, which means that professional investors are more optimistic about the stock than for 96% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 46, which means that the share price of MEG Energy 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 54% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 42, which means that the company has a financing structure that is riskier than those of 58% 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 77, MEG Energy is better positioned than 77% 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 71), and professional market sentiment is positive (Sentiment Rank of 96), but value and safety are below average. The Safety Rank is the least significant 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 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. 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 if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for MEG Energy very positive
ANALYSIS: With an Obermatt Sentiment Rank of 96 (better than 96% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock MEG Energy is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for MEG Energy. Analyst Opinions are at a rank of 43 (worse than 57% 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 80, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in MEG Energy. 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 97, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 97% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 96 (more positive than 96% compared with investment alternatives), MEG Energy 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: MEG Energy Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 46 (worse than 54% compared with alternatives), MEG Energy shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for MEG Energy. Price-to-Sales (P/S) is 81, which means that the stock price compared with what market professionals expect for future sales is lower than for 81% of comparable companies, indicating a good value concerning MEG Energy's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio), which is more favorable than for 52% of alternatives (48% of peers have a higher ratio). But expected dividend yields with a Dividend Yield rank of 1 are lower than average (dividends are expected to be lower than 99% of other stocks) while the Price to Profit ratio (or Price to Earnings (P/E) ratio) is higher than average with a Price-to-Profit Rank of 46, 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 46, is a hold recommendation based on MEG Energy's stock price compared with the company's operational size and dividend yields. Low profits and low dividends as seen here for MEG Energy may indicate a restructuring phase. This could be transitory, making the company a good value when profits recover and dividends return to higher levels. If the stock price is compared with the size indicators for revenue and invested capital, it is on the lower side, making this stock a good value investment (apart from current profit and dividend expectations). ...read more
Growth Strategy: MEG Energy Growth Momentum good
| GROWTH METRICS | September 7, 2023 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 10 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 45 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 80 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 99 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 71 |
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ANALYSIS: With an Obermatt Growth Rank of 71 (better than 71% compared with alternatives), MEG Energy 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 half of the indicators below and half above average for MEG Energy. Capital Growth has a rank of 80, which means that currently professionals expect the company to grow its invested capital more than 45% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 99 (above 99% of alternative investments). But Sales Growth has only a rank of 10, which means that, currently, professionals expect the company to grow less than 90% of its competitors, and Profit Growth is also low at a rank of 45. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 71, is a buy 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 MEG Energy, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: MEG Energy Debt Financing Safety below-average
| SAFETY METRICS | September 7, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 42 |
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| REFINANCING | ||||||||
| REFINANCING | 84 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 16 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 42 |
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ANALYSIS: With an Obermatt Safety Rank of 42 (better than 42% compared with alternatives), the company MEG Energy 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 MEG Energy 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 just one indicator above average for MEG Energy and the other two below average. Refinancing is at 84, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 84% of its competitors. But Leverage is high with a rank of 42, meaning the company has an above-average debt-to-equity ratio. It has more debt than 58% of its competitors. Liquidity is also on the riskier side with a rank of 16, meaning the company generates less profit to service its debt than 84% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 42 (worse than 58% compared with alternatives), MEG Energy has a financing structure that is riskier than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for MEG Energy are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. ...read more
Combined financial peformance: MEG Energy Above-Average Financial Performance
| COMBINED PERFORMANCE | September 7, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 46 |
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| GROWTH | ||||||||
| GROWTH | 71 |
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| SAFETY | ||||||||
| SAFETY | 16 |
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| COMBINED | ||||||||
| COMBINED | 60 |
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ANALYSIS: With an Obermatt Combined Rank of 60 (better than 60% compared with investment alternatives), MEG Energy (Oil & Gas Production, Canada) shares have above-average financial characteristics compared with similar stocks. Shares of MEG Energy are low in value (priced high) with a consolidated Value Rank of 46 (worse than 54% of alternatives), and are riskily financed (Safety Rank of 42, which means above-average debt burdens) but show above-average growth (Growth Rank of 71). ...read more
RECOMMENDATION: A Combined Rank of 60, is a buy recommendation based on MEG Energy's financial characteristics. As the company MEG Energy shows low value with an Obermatt Value Rank of 46 (54% 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 71% of comparable companies (Obermatt Growth Rank is 71). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 42 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 MEG Energy, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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