May 11, 2023
Top 10 Stock Reliance Worldwide 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: Reliance Worldwide – Top 10 Stock in Australian Securities Exchange Index ASX 100
Reliance Worldwide is listed as a top 10 stock on May 11, 2023 in the market index ASX 100 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 likely an investment into the future. Based on the Obermatt 360° Rank of 25 (25% performer), Obermatt assesses an overall hold recommendation for Reliance Worldwide on May 11, 2023.
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° Assessment Reliance Worldwide Hold
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 21 |
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| GROWTH | ||||||||
| GROWTH | 28 |
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| SAFETY | ||||||||
| SAFETY | 27 |
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| SENTIMENT | ||||||||
| SENTIMENT | 89 |
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| 360° VIEW | ||||||||
| 360° VIEW | 25 |
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ANALYSIS: With an Obermatt 360° Rank of 25 (better than 25% compared with alternatives), overall professional sentiment and engagement for the stock Reliance Worldwide are below the industry average. The 360° Rank is based on consolidating four consolidated indicators, with three out of four indicators below average for Reliance Worldwide. The consolidated Sentiment Rank has a good rank of 89, which means that professional investors are more optimistic about the stock than for 89% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 21, which means that the share price of Reliance Worldwide 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 28, 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 28% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 27 which means that the company has a riskier financing structure than 73% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a 360° Rank of 25, Reliance Worldwide is worse than 75% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 89) 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 Reliance Worldwidẹ is bright. A small investment might be justified, but proceed with caution. ...read more
Sentiment Strategy: Professional Market Sentiment for Reliance Worldwide very positive
ANALYSIS: With an Obermatt Sentiment Rank of 89 (better than 89% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Reliance Worldwide is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Reliance Worldwide. Analyst Opinions are at a rank of 41 (worse than 59% 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 87, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Reliance Worldwide. Even better, the Professional Investors rank is 95, meaning that professional investors hold more stock in this company than in 95% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 72, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 72% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 89 (more positive than 89% compared with investment alternatives), Reliance Worldwide 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: Reliance Worldwide Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 21 (worse than 79% compared with alternatives), Reliance Worldwide shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Reliance Worldwide. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 60% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales has a value of 16 which means that the stock price compared with what market professionals expect for future profits is higher than 84% of comparable companies, indicating a low value concerning Reliance Worldwide's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 35 which means that the stock price compared with what market professionals expect for future profit levels is higher than 65% of comparable companies. In addition, Price-to-Book Capital (also referred to as market-to-book ratio) with an Obermatt Price-to-Book Rank of 23 is also low. Compared with invested capital, the stock price is higher than for 77% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 21, is a SELL recommendation based on Reliance Worldwide's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Reliance Worldwide? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Reliance Worldwide only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Reliance Worldwide Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 28 (better than 28% compared with alternatives), Reliance Worldwide 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 three out of four indicators below average for Reliance Worldwide. Only Capital Growth has a good rank of 54, which means that currently professionals expect the company to grow its invested capital more than 18% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 29 which means that currently professionals expect the company to grow less than 71% of its competitors. Profit Growth with a rank of 18 and Stock Returns with a rank of 49 are also low (below 51% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 28, is a HOLD recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Reliance Worldwide is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more
Safety Strategy: Reliance Worldwide Debt Financing Safety below-average
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 40 |
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| REFINANCING | ||||||||
| REFINANCING | 31 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 35 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 27 |
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ANALYSIS: With an Obermatt Safety Rank of 27 (better than 27% compared with alternatives), the company Reliance Worldwide 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 Reliance Worldwide 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 Reliance Worldwide. Liquidity is at 35, meaning that the company generates less profit to service its debt than 65% 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 40, meaning the company has an above-average debt-to-equity ratio. It has more debt than 60% of its competitors. Finally, Refinancing is at a rank of 31 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 69% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 27 (worse than 73% compared with alternatives), Reliance Worldwide 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. ...read more
Combined financial peformance: Reliance Worldwide Lowest Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 21 |
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| GROWTH | ||||||||
| GROWTH | 28 |
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| SAFETY | ||||||||
| SAFETY | 35 |
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| COMBINED | ||||||||
| COMBINED | 7 |
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ANALYSIS: With an Obermatt Combined Rank of 7 (worse than 93% compared with investment alternatives), Reliance Worldwide (Building Products, Australia) shares have lower financial characteristics compared with similar stocks. Shares of Reliance Worldwide are low in value (priced high) with a consolidated Obermatt Value Rank of 21 (worse than 79% of alternatives), show below-average growth (Growth Rank of 28), and are riskily financed (Safety Rank of 27), which means above-average debt burdens. ...read more
RECOMMENDATION: An Obermatt Combined Rank of 7, is a sell recommendation based on Reliance Worldwide's financial characteristics. As the company Reliance Worldwide's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 21), low growth (Obermatt Growth Rank of 28), and risky financing practices (Obermatt Safety Rank of 27), 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 used in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
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