September 28, 2023
Top 10 Stock Shin-Etsu Chemical Buy 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: Shin-Etsu Chemical – Top 10 Stock in Water Efficiency Leaders
Shin-Etsu Chemical is listed as a top 10 stock on September 28, 2023 in the market index Water Efficiency because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 72 (high 72% performer), Obermatt assesses an overall buy recommendation for Shin-Etsu Chemical on September 28, 2023.
Snapshot: Obermatt Ranks
| Country | Japan |
| Industry | Specialty Chemicals |
| Index | TOPIX 100, Low Emissions, Energy Efficient, Water Efficiency, Nikkei 225 |
| Size class | XX-Large |
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 Shin-Etsu Chemical Buy
| 360 METRICS | September 28, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 15 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 95 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 82 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 62 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 72 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 72 (better than 72% compared with alternatives), overall professional sentiment and financial characteristics for the stock Shin-Etsu Chemical are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Shin-Etsu Chemical. 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. This means that growth is higher than for 95% of competitors in the same industry. The consolidated Safety Rank at 82 means that the company has a financing structure that is safer than 82% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 62, which means that professional investors are more optimistic about the stock than for 62% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 15, meaning that the share price of Shin-Etsu Chemical is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 85% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 72, Shin-Etsu Chemical is better positioned than 72% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 95), a safe financing structure (Safety Rank of 82), and positive professional market sentiment (Sentiment Rank of 62), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Shin-Etsu Chemical compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (95% better than peers). The value rank could be the reverse reflection of that (5%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Shin-Etsu Chemical positive
ANALYSIS: With an Obermatt Sentiment Rank of 62 (better than 62% compared with alternatives), overall professional sentiment and engagement for the stock Shin-Etsu Chemical 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 Shin-Etsu Chemical. Analyst Opinions are at a rank of 55 (better than 55% 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 97 which means that currently, professional investors hold more stock in this company than in 97% of alternative investment opportunities. But Analyst Opinions Change has a rank of 36, 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 Shin-Etsu Chemical. Furthermore, Market Pulse has a rank of 34, 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 66% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 62 (more positive than 62% compared with investment alternatives), Shin-Etsu Chemical 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
Value Strategy: Shin-Etsu Chemical Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 15 (worse than 85% compared with alternatives), Shin-Etsu Chemical 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 Shin-Etsu Chemical. Price-to-Sales is 7 which means that the stock price compared with what market professionals expect for future profits is higher than 93% of comparable companies, indicating a low value concerning Shin-Etsu Chemical's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 15, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Shin-Etsu Chemical. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 38 and Dividend Yield, which is lower than 75% 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 15, is a sell recommendation based on Shin-Etsu Chemical's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Shin-Etsu Chemical? 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 Shin-Etsu Chemical? 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. Shin-Etsu Chemical 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
Growth Strategy: Shin-Etsu Chemical Growth Momentum high
| GROWTH METRICS | September 28, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 79 |
|
||||||
| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 38 |
|
||||||
| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 84 |
|
||||||
| STOCK RETURNS | ||||||||
| STOCK RETURNS | 95 |
|
||||||
| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 95 |
|
||||||
ANALYSIS: With an Obermatt Growth Rank of 95 (better than 95% compared with alternatives) for 2023, Shin-Etsu Chemical 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 but one indicator above average for Shin-Etsu Chemical. Sales Growth has a rank of 79 which means that currently, professionals expect the company to grow more than 79% of its competitors. Capital Growth is also above 38% of competitors with a rank of 84, and Stock Returns with the rank of 95 is also an outperformance. Only Profit Growth is low with a rank of 38 which means that currently, professionals expect the company to grow its profits less than 62% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 95, is a buy recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, Shin-Etsu Chemical is a good growth stock. ...read more
Safety Strategy: Shin-Etsu Chemical Debt Financing Safety very solid
| SAFETY METRICS | September 28, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 94 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 27 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 98 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 82 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 82 (better than 82% compared with alternatives) for 2023, the company Shin-Etsu Chemical has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Shin-Etsu Chemical is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Shin-Etsu Chemical. Leverage is at a rank of 94, meaning the company has a below-average debt-to-equity ratio. It has less debt than 94% of its competitors. Liquidity is also good at a rank of 98, meaning the company generates more profit to service its debt than 98% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 27, 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 73% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 82 (better than 82% compared with alternatives), Shin-Etsu Chemical has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Shin-Etsu Chemical. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Shin-Etsu Chemical Above-Average Financial Performance
| COMBINED PERFORMANCE | September 28, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 15 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 95 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 98 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 66 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 66 (better than 66% compared with investment alternatives), Shin-Etsu Chemical (Specialty Chemicals, Japan) shares have above-average financial characteristics compared with similar stocks. Shares of Shin-Etsu Chemical are low in value (priced high) with a consolidated Value Rank of 15 (worse than 85% of alternatives). But they show above-average growth (Growth Rank of 95) and are safely financed (Safety Rank of 82, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 66, is a buy recommendation based on Shin-Etsu Chemical's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Shin-Etsu Chemical exhibits low value (Obermatt Value Rank of 15), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 95). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 82) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.