December 21, 2023
Top 10 Stock Aurizon 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 Aurizon Hold

360 METRICS	December 21, 2023
VALUE
VALUE	43
GROWTH
GROWTH	41
SAFETY
SAFETY	19
SENTIMENT
SENTIMENT	50
360° VIEW
360° VIEW	25

ANALYSIS: With an Obermatt 360° View of 25 (better than 25% compared with alternatives), overall professional sentiment and financial characteristics for the stock Aurizon are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Aurizon. The consolidated Sentiment Rank has a good rank of 50, which means that professional investors are more optimistic about the stock than for 50% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 43, which means that the share price of Aurizon 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 41, 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 41% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 19 which means that the company has a riskier financing structure than 81% 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 25, Aurizon is worse than 75% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 50) 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 Aurizoṇ is bright. A small investment might be justified, but proceed with caution. ...read more

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Sentiment Strategy: Professional Market Sentiment for Aurizon positive

SENTIMENT METRICS	December 21, 2023
ANALYST OPINION
ANALYST OPINION	51
OPINIONS CHANGE
OPINIONS CHANGE	42
PRO HOLDINGS
PRO HOLDINGS	74
MARKET PULSE
MARKET PULSE	45
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	50

ANALYSIS: With an Obermatt Sentiment Rank of 50 (better than 50% compared with alternatives), overall professional sentiment and engagement for the stock Aurizon is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and the other half above average for Aurizon. Analyst Opinions are at a rank of 51 (better than 51% of alternative investments). Currently, stock research analysts tend to recommend a stock investment in the company. There are also many institutional investors invested in the stock, represented by a Professional Investors rank of 74 which means that currently, professional investors hold more stock in this company than in 74% of alternative investment opportunities. But Analyst Opinions Change has a rank of 42, which means that stock research experts are changing their opinions for the worse in recommending investing in the company. In other words, they are getting more critical of investments in Aurizon. Furthermore, Market Pulse has a rank of 45, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 55% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 50 (more positive than 50% compared with investment alternatives), Aurizon has a reputation among professional investors that is above-average compared with that of its competitors. Three below-market sentiment indicators are a sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it may be around the corner. ...read more

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Value Strategy: Aurizon Stock Price Value below-average critical

VALUE METRICS	December 21, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	28
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	63
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	29
DIVIDEND YIELD
DIVIDEND YIELD	92
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	43

ANALYSIS: With an Obermatt Value Rank of 43 (worse than 57% compared with alternatives), Aurizon 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 Aurizon. Price-to-Profit (also referred to as price-earnings, P/E) is 63 which means that the stock price compared with what market professionals expect for future profits is lower than for 63% of comparable companies, indicating a good value concerning Aurizon'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 29, which means that the stock price is lower as regards to invested capital than for 29% of comparable investments. On the other hand, Price-to-Sales is less favorable than 72% of alternatives (only 28% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 8% 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 43, is a hold recommendation based on Aurizon'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. ...read more

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Growth Strategy: Aurizon Growth Momentum low

GROWTH METRICS	December 21, 2023
REVENUE GROWTH
REVENUE GROWTH	53
PROFIT GROWTH
PROFIT GROWTH	68
CAPITAL GROWTH
CAPITAL GROWTH	34
STOCK RETURNS
STOCK RETURNS	43
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	41

ANALYSIS: With an Obermatt Growth Rank of 41 (better than 41% compared with alternatives), Aurizon 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 Aurizon. Sales Growth has a rank of 53, which means that, currently, professionals expect the company to grow more than 53% of its competitors. Profit Growth with a rank of 68 is also above average. But Capital Growth has only a rank of 34, and Stock Returns with 43 are also below-average. Stock returns for Aurizon have recently been below 57% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 41, is a hold recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for Aurizon. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. ...read more

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Safety Strategy: Aurizon Debt Financing Safety risky

SAFETY METRICS	December 21, 2023
LEVERAGE
LEVERAGE	26
REFINANCING
REFINANCING	25
LIQUIDITY
LIQUIDITY	26
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	19

ANALYSIS: With an Obermatt Safety Rank of 19 (better than 19% compared with alternatives), the company Aurizon has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Aurizon 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 Aurizon. Liquidity is at 26, meaning that the company generates less profit to service its debt than 74% 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 26, meaning the company has an above-average debt-to-equity ratio. It has more debt than 74% of its competitors. Finally, Refinancing is at a rank of 25 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 75% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 19 (worse than 81% compared with alternatives), Aurizon has a financing structure that is significantly 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: Aurizon Lowest Financial Performance

COMBINED PERFORMANCE	December 21, 2023
VALUE
VALUE	43
GROWTH
GROWTH	41
SAFETY
SAFETY	26
COMBINED
COMBINED	19

ANALYSIS: With an Obermatt Combined Rank of 19 (worse than 81% compared with investment alternatives), Aurizon (Railroads, Australia) shares have lower financial characteristics compared with similar stocks. Shares of Aurizon are low in value (priced high) with a consolidated Value Rank of 43 (worse than 57% of alternatives), show below-average growth (Growth Rank of 41), and are riskily financed (Safety Rank of 19), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 19, is a sell recommendation based on Aurizon's financial characteristics. As the company Aurizon's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 43), low growth (Obermatt Growth Rank of 41), and risky financing practices (Obermatt Safety Rank of 19), 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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