Fact based stock research
Nick Scali (ASX:NCK)

AU000000NCK1

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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.

Nick Scali stock research in summary

nickscali.com.au

ANALYSIS: With an Obermatt Combined Rank of 16 (worse than 84% compared with investment alternatives), Nick Scali (Homefurnishing Retail, Australia) shares have lower financial characteristics compared with similar stocks. Shares of Nick Scali are low in value (priced high) with a consolidated Value Rank of 41 (worse than 59% of alternatives), show below-average growth (Growth Rank of 39), and are riskily financed (Safety Rank of 28), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 16, is a sell recommendation based on Nick Scali's financial characteristics. As the company Nick Scali's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 41), low growth (Obermatt Growth Rank of 39), and risky financing practices (Obermatt Safety Rank of 28), 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. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	41
Growth Rank	39
Safety Rank	28
Combined Rank	16

Country	Australia
Industry	Homefurnishing Retail
Index	ASX 300
Size class	Medium

25-Apr-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

Multiple opinions. One number.

Analysts rarely agree on a stock’s future. So, who do you believe? Obermatt translates those collective views into a single Sentiment Rank. That plus the financial ranks give you the ultimate 360° View. Sign up to access them.

Why popular stocks have low ratings

It’s easier said than done. When your stock drops, it’s easy to want to sell it and find a better performer. Think twice, or even three times, before trading. Those fees (especially the hidden ones) can eat up your gains.

Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Nick Scali

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	49	31	37	41
GROWTH
GROWTH	100	83	19	39
SAFETY
SAFETY	57	28	28	28
SENTIMENT
SENTIMENT	n/a	28	63	^new
360° VIEW
360° VIEW	n/a	25	14	^new

Most recent update of the stock research: 25-Apr-2024. Financial reporting date used for calculating ranks: 31-Dec-2023. Stock research history is based on the Obermatt Method. The higher the rank, the better Nick Scali is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	49	31	37	41
GROWTH
GROWTH	100	83	19	39
SAFETY
SAFETY	57	28	28	28
COMBINED
COMBINED	84	43	1	16

Last update of combined financial performance: 25-Apr-2024. Stock analysis on combined financial performance: The higher the rank of Nick Scali the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 41 (worse than 59% compared with alternatives), Nick Scali shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Nick Scali. Price-to-Profit (also referred to as price-earnings, P/E) is 68 which means that the stock price compared with what market professionals expect for future profits is lower than for 68% of comparable companies, indicating a good value concerning Nick Scali's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 13, which means that the stock price is lower as regards to invested capital than for 13% of comparable investments. On the other hand, Price-to-Sales is less favorable than 87% of alternatives (only 13% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 18% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 41, is a hold recommendation based on Nick Scali's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	19	15	15	13
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	72	52	61	68
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	6	13	18	13
DIVIDEND YIELD
DIVIDEND YIELD	82	94	86	82
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	49	31	37	41

Last update of Value Rank: 25-Apr-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Nick Scali; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 39 (better than 39% compared with alternatives), Nick Scali 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 Nick Scali. Sales Growth has a rank of 59 which means that currently professionals expect the company to grow more than 59% of its competitors. Stock Returns are also above average with a rank of 91. But Capital Growth has only a rank of 7, which means that currently professionals expect the company to grow its invested capital less than 93% of its competitors. Profit Growth is also low, with a rank of only 22, 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 39, 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 91% 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. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	76	80	54	59
PROFIT GROWTH
PROFIT GROWTH	94	26	10	22
CAPITAL GROWTH
CAPITAL GROWTH	n/a	68	14	7
STOCK RETURNS
STOCK RETURNS	88	97	73	91
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	100	83	19	39

Last update of Growth Rank: 25-Apr-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Nick Scali.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 28 (better than 28% compared with alternatives), the company Nick Scali 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 Nick Scali 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 Nick Scali. Liquidity is at 51, meaning the company generates more profit to service its debt than 51% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 22, 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 78% of its competitors. Leverage is also high at a rank of 16, which means that the company has an above-average debt-to-equity ratio. It has more debt than 84% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 28 (worse than 72% compared with alternatives), Nick Scali has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	59	12	17	16
REFINANCING
REFINANCING	41	32	28	22
LIQUIDITY
LIQUIDITY	48	51	49	51
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	57	28	28	28

Last update of Safety Rank: 25-Apr-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Nick Scali and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	79	46	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	75	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	16	96	^new
MARKET PULSE
MARKET PULSE	n/a	31	11	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	28	63	^new

Last update of Sentiment Rank: 25-Apr-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Nick Scali.
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