March 7, 2024
Top 10 Stock Aurizon Hold 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: Aurizon – Top 10 Stock in Australian Securities Exchange Index ASX 200
Aurizon is listed as a top 10 stock on March 07, 2024 in the market index ASX 200 because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company enjoys a positive professional investor sentiment, but all financial facts speak against a stock purchase. This is probably an investment into the future. Based on the Obermatt 360° View of 34 (34% performer), Obermatt assesses an overall hold recommendation for Aurizon on March 07, 2024.
Snapshot: Obermatt Ranks
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 Aurizon Hold
| 360 METRICS | March 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 39 |
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| SAFETY | ||||||||
| SAFETY | 14 |
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| SENTIMENT | ||||||||
| SENTIMENT | 72 |
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| 360° VIEW | ||||||||
| 360° VIEW | 34 |
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ANALYSIS: With an Obermatt 360° View of 34 (better than 34% 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 72, which means that professional investors are more optimistic about the stock than for 72% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 49, 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 39, 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 39% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 14 which means that the company has a riskier financing structure than 86% 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 34, Aurizon is worse than 66% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 72) 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
Sentiment Strategy: Professional Market Sentiment for Aurizon positive
ANALYSIS: With an Obermatt Sentiment Rank of 72 (better than 72% 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 metrics below and half above average for Aurizon. Analyst Opinions are at a rank of 37 (worse than 63% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 47, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 100, which means that professional investors hold more stock in this company than in 100% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 65, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 65% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Aurizon and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 72 (more positive than 72% compared with investment alternatives), Aurizon has a reputation among professional investors that is above-average compared with that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Aurizon Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 49 (worse than 51% 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 65 which means that the stock price compared with what market professionals expect for future profits is lower than for 65% 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 31, which means that the stock price is lower as regards to invested capital than for 31% of comparable investments. On the other hand, Price-to-Sales is less favorable than 75% of alternatives (only 25% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 6% 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 49, 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
Growth Strategy: Aurizon Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 39 (better than 39% 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. Profit Growth has a rank of 65, which means that currently professionals expect the company to grow its profits more than 65% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 83 (above 83% of alternative investments). But Sales Growth has a below the median rank of 42, which means that, currently, professionals expect the company to grow less than 58% of its competitors, and Capital Growth also has a lower rank of 18. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 39, is a hold recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Aurizon. ...read more
Safety Strategy: Aurizon Debt Financing Safety risky
| SAFETY METRICS | March 7, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 25 |
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| REFINANCING | ||||||||
| REFINANCING | 16 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 26 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 14 |
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ANALYSIS: With an Obermatt Safety Rank of 14 (better than 14% 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 25, meaning the company has an above-average debt-to-equity ratio. It has more debt than 75% of its competitors. Finally, Refinancing is at a rank of 16 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 84% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 14 (worse than 86% 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.
Combined financial peformance: Aurizon Lowest Financial Performance
| COMBINED PERFORMANCE | March 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 39 |
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| SAFETY | ||||||||
| SAFETY | 26 |
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| COMBINED | ||||||||
| COMBINED | 13 |
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ANALYSIS: With an Obermatt Combined Rank of 13 (worse than 87% 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 49 (worse than 51% of alternatives), show below-average growth (Growth Rank of 39), and are riskily financed (Safety Rank of 14), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 13, 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 49), low growth (Obermatt Growth Rank of 39), and risky financing practices (Obermatt Safety Rank of 14), 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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