August 31, 2023
Top 10 Stock SKF Strong 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: SKF – Top 10 Stock in Water Technology


skf.com


SKF is listed as a top 10 stock on August 31, 2023 in the market index Water Tech because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 98 (top 98% performer), Obermatt assesses an overall strong buy recommendation for SKF on August 31, 2023.


Snapshot: Obermatt Ranks


Country Sweden
Industry Industrial Machinery
Index Dividends Europe, Diversity Europe, Human Rights, Water Tech, OMX 30
Size class X-Large
Latest Research


Top 10 Stocks ≠ most popular stocks

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 SKF Strong Buy

360 METRICS August 31, 2023
VALUE
VALUE
GROWTH
GROWTH
SAFETY
SAFETY
SENTIMENT
SENTIMENT
360° VIEW
360° VIEW

ANALYSIS: With an Obermatt 360° View of 98 (better than 98% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock SKF are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for SKF. The consolidated Value Rank has an attractive rank of 87, which means that the share price of SKF is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 87% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 85. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 57. But the consolidated Growth Rank has a low rank of 49, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 51 of its competitors have better growth. ...read more

RECOMMENDATION: With a consolidated 360° View of 98, SKF is better positioned than 98% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 87), secure financing practices (Safety Rank of 85), and positive market sentiment in the professional investor community (Sentiment Rank of 57). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 49), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of SKF is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more




Sentiment Strategy: Professional Market Sentiment for SKF positive

SENTIMENT METRICS August 31, 2023
ANALYST OPINION
ANALYST OPINION
OPINIONS CHANGE
OPINIONS CHANGE
PRO HOLDINGS
PRO HOLDINGS
MARKET PULSE
MARKET PULSE
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT

ANALYSIS: With an Obermatt Sentiment Rank of 57 (better than 57% compared with alternatives), overall professional sentiment and engagement for the stock SKF is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for SKF. Analyst Opinions are at a rank of 3 (worse than 97% 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 59, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in SKF. Even better, the Professional Investors rank is 69, meaning that professional investors hold more stock in this company than in 69% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 85, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 85% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 57 (more positive than 57% compared with investment alternatives), SKF has a reputation among professional investors that is above-average compared with 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: SKF Stock Price Value at the top

VALUE METRICS August 31, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)
DIVIDEND YIELD
DIVIDEND YIELD
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE

ANALYSIS: With an Obermatt Value Rank of 87 (better than 87% compared with alternatives) for 2023, SKF shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for SKF. Price-to-Sales is 61 which means that the stock price compared with what market professionals expect for future sales is lower than for 61% of comparable companies, indicating a good value for SKF's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 74% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 73. Compared with other companies in the same industry, dividend yields of SKF are expected to be higher than for 87% of all competitors (a Dividend Yield rank of 87). ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 87, is a buy recommendation based on SKF's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in SKF based on its detailed value metrics.



Growth Strategy: SKF Growth Momentum low

GROWTH METRICS August 31, 2023
REVENUE GROWTH
REVENUE GROWTH
PROFIT GROWTH
PROFIT GROWTH
CAPITAL GROWTH
CAPITAL GROWTH
STOCK RETURNS
STOCK RETURNS
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH

ANALYSIS: With an Obermatt Growth Rank of 49 (better than 49% compared with alternatives), SKF 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 SKF. Profit Growth has a rank of 88, which means that currently professionals expect the company to grow its profits more than 88% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 63 (above 63% of alternative investments). But Sales Growth has a below the median rank of 10, which means that, currently, professionals expect the company to grow less than 90% of its competitors, and Capital Growth also has a lower rank of 31. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 49, 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 SKF. ...read more



Safety Strategy: SKF Debt Financing Safety very solid

SAFETY METRICS August 31, 2023
LEVERAGE
LEVERAGE
REFINANCING
REFINANCING
LIQUIDITY
LIQUIDITY
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY

ANALYSIS: With an Obermatt Safety Rank of 85 (better than 85% compared with alternatives) for 2023, the company SKF has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of SKF 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, where all three are above average for SKF. Leverage is at 60, meaning the company has a below-average debt-to-equity ratio. It has less debt than 60% of its competitors. Refinancing is at a rank of 79, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 79% of its competitors. Finally, Liquidity is also good at a rank of 68, which means that the company generates more profit to service its debt than 68% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 85 (better than 85% compared with alternatives), SKF has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more



Combined financial peformance: SKF Top Financial Performance

COMBINED PERFORMANCE August 31, 2023
VALUE
VALUE
GROWTH
GROWTH
SAFETY
SAFETY
COMBINED
COMBINED

ANALYSIS: With an Obermatt Combined Rank of 100 (better than 100% compared with investment alternatives), SKF (Industrial Machinery, Sweden) shares have much better financial characteristics than comparable stocks. Shares of SKF are a good value (attractively priced) with a consolidated Value Rank of 87 (better than 87% of alternatives), are safely financed (Safety Rank of 85, which means low debt burdens), but show below-average growth (Growth Rank of 49). ...read more

RECOMMENDATION: A Combined Rank of 100, is a strong buy recommendation based on SKF's financial characteristics. As the company SKF's key financial metrics exhibit good value (Obermatt Value Rank of 87) but low growth (Obermatt Growth Rank of 49) while being safely financed (Obermatt Safety Rank of 85), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 87% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more

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