September 21, 2023
Top 10 Stock REA 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 REA Hold

360 METRICS	September 21, 2023
VALUE
VALUE	6
GROWTH
GROWTH	95
SAFETY
SAFETY	39
SENTIMENT
SENTIMENT	41
360° VIEW
360° VIEW	35

ANALYSIS: With an Obermatt 360° View of 35 (better than 35% compared with alternatives), overall professional sentiment and financial characteristics for the stock REA are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for REA. The consolidated Growth Rank has a good rank of 95, 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. It ranks higher than 95% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 6 means that the share price of REA is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 94% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 39, which means that the company has a riskier financing structure than 61% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 41, indicating professional investors are more pessimistic about the stock than for 59% of alternative investment opportunities. ...read more

RECOMMENDATION: With a consolidated 360° View of 35, REA is worse than 65% of all alternative stock investment opportunities based on the Obermatt Method. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 95), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 41), the company is rather risky when it comes to financing (Safety Rank of 39). The negative market view on REA may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of REA compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth 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 (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more

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Sentiment Strategy: Professional Market Sentiment for REA only reserved

SENTIMENT METRICS	September 21, 2023
ANALYST OPINION
ANALYST OPINION	18
OPINIONS CHANGE
OPINIONS CHANGE	30
PRO HOLDINGS
PRO HOLDINGS	82
MARKET PULSE
MARKET PULSE	46
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	41

ANALYSIS: With an Obermatt Sentiment Rank of 41 (better than 41% compared with alternatives), overall professional sentiment and engagement for the stock REA is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and the other half above average for REA. Analyst Opinions are at a rank of 18 (worse than 82% 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 30, which means that stock research experts are getting more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 46, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 54% of competitors). On the upside, the Professional Investors rank is 82, which means that professional investors hold more stock in this company than in 82% of alternative investment opportunities. Pros tend to favor investing in this company. This could be due to a large company size, which could contribute to the higher share of professional investors in the company. If this is not the case, the low sentiment ranks are more challenging to explain. ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 41 (less encouraging than 59% compared with investment alternatives), REA has a reputation among professional investors that is below that of its competitors. Should the company be on the smaller side, the presence of professional investors could be reassuring. That would make REA stock something like a hidden gem. Investors should make sure with further research that this is true, because all other sentiment indicators are negative which is a sign for caution. ...read more

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Value Strategy: REA Stock Price Value low

VALUE METRICS	September 21, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	1
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	10
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	7
DIVIDEND YIELD
DIVIDEND YIELD	40
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	6

ANALYSIS: With an Obermatt Value Rank of 6 (worse than 94% compared with alternatives), REA shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for REA. Price-to-Sales is 1 which means that the stock price compared with what market professionals expect for future profits is higher than 99% of comparable companies, indicating a low value concerning REA's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 7, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of REA. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 10 and Dividend Yield, which is lower than 60% 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 6, is a sell recommendation based on REA's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for REA? 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 REA? 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. REA 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: REA Growth Momentum high

GROWTH METRICS	September 21, 2023
REVENUE GROWTH
REVENUE GROWTH	79
PROFIT GROWTH
PROFIT GROWTH	60
CAPITAL GROWTH
CAPITAL GROWTH	77
STOCK RETURNS
STOCK RETURNS	87
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	95

ANALYSIS: With an Obermatt Growth Rank of 95 (better than 95% compared with alternatives) for 2023, REA shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for REA. Sales Growth has a value of 79, which means that, currently, professionals expect the company to grow more than 79% of its competitors. The same is valid for Profit Growth with a value of 60 and for Capital Growth with 77. In addition, Stock Returns had an above-average rank value of 87, which means they have been higher than 87% of comparable investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 95, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, REA exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more

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Safety Strategy: REA Debt Financing Safety below-average

SAFETY METRICS	September 21, 2023
LEVERAGE
LEVERAGE	46
REFINANCING
REFINANCING	16
LIQUIDITY
LIQUIDITY	48
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	39

ANALYSIS: With an Obermatt Safety Rank of 39 (better than 39% compared with alternatives), the company REA 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 REA 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 REA. 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 46, meaning the company has an above-average debt-to-equity ratio. It has more debt than 54% 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 39 (worse than 61% compared with alternatives), REA 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: REA Below-Average Financial Performance

COMBINED PERFORMANCE	September 21, 2023
VALUE
VALUE	6
GROWTH
GROWTH	95
SAFETY
SAFETY	48
COMBINED
COMBINED	47

ANALYSIS: With an Obermatt Combined Rank of 47 (worse than 53% compared with investment alternatives), REA (Interactive Media & Services, Australia) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of REA are low in value (priced high) with a consolidated Value Rank of 6 (worse than 94% of alternatives), and are riskily financed (Safety Rank of 39, which means above-average debt burdens) but show above-average growth (Growth Rank of 95). ...read more

RECOMMENDATION: A Combined Rank of 47, is a hold recommendation based on REA's financial characteristics. As the company REA shows low value with an Obermatt Value Rank of 6 (94% 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 95% of comparable companies (Obermatt Growth Rank is 95). 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 39 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 REA, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more

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