February 15, 2024
Top 10 Stock Software 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: Software – Top 10 Stock in Deutscher Aktienindex Mid Cap MDAX
Software is listed as a top 10 stock on February 15, 2024 in the market index MDAX because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 45 (45% performer), Obermatt assesses an overall hold recommendation for Software on February 15, 2024.
Snapshot: Obermatt Ranks
| Country | Germany |
| Industry | Systems Software |
| Index | CDAX, Artificial Intelligence, Dividends Europe, MDAX, TecDAX |
| Size class | 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 Software Hold
| 360 METRICS | February 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 48 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 95 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 35 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 31 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 45 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 45 (better than 45% compared with alternatives), overall professional sentiment and financial characteristics for the stock Software are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Software. 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 48 means that the share price of Software is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 52% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 35, which means that the company has a riskier financing structure than 65% 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 31, indicating professional investors are more pessimistic about the stock than for 69% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 45, Software is worse than 55% 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 31), the company is rather risky when it comes to financing (Safety Rank of 35). The negative market view on Software 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 Software 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
Sentiment Strategy: Professional Market Sentiment for Software only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 31 (better than 31% compared with alternatives), overall professional sentiment and engagement for the stock Software is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Software. 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 60, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Software. More encouragingly, the Professional Investors rank is 71, which means that professional investors hold more stock in this company than in 71% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 32, 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 68% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 31 (less encouraging than 69% compared with investment alternatives), Software has a reputation among professional investors that is below that of its competitors. The sentiment signals are mixed for Software. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: Software Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 48 (worse than 52% compared with alternatives), Software 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 Software. Expected dividend yields are higher than for 68% of comparable companies (a Dividend Yield rank of 68), making the stock attractive. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 70, which means that the stock price is lower compared with invested capital than for 70% of comparable investments. But in respect to sales and profits, the picture is reversed. Price-to-Sales is 42 which means that the stock price compared with what market professionals expect for future profits is higher than for 58% of comparable companies, indicating a low value concerning Software's sales levels. The Price-to-Profit ratio (also referred to as price-earnings (P/E) ratio) is also unfavorable for Software with a rank of 39. This means that the stock price, compared with what market professionals expect for future profits, is higher than for 61% of comparable companies, indicating a low value concerning Software's profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 48, is a hold recommendation based on Software's stock price compared with the company's operational size and dividend yields. The company seems confident that it can generate a reasonable return on invested capital, because it pays an above-average dividend while profits are below what you would expect for a company with this stock price. If you agree with this practice and believe that profits will return to higher levels, as the current dividend policy suggests, Software may be an attractive investment. If this is not the case, you may want to be careful with this stock as it is also expensive compared with its expected revenue levels. ...read more
Growth Strategy: Software Growth Momentum high
| GROWTH METRICS | February 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 45 |
|
||||||
| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 88 |
|
||||||
| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 76 |
|
||||||
| STOCK RETURNS | ||||||||
| STOCK RETURNS | 96 |
|
||||||
| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 95 |
|
||||||
ANALYSIS: With an Obermatt Growth Rank of 95 (better than 95% compared with alternatives) for 2024, Software 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 Software. 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. The same is valid for capital growth and stock returns. Capital Growth has a rank of 76, and Stock Returns has a rank of 96 which means that the stock returns have recently been above 96% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 45 (55% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 95, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Software Debt Financing Safety below-average
| SAFETY METRICS | February 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 37 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 35 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 50 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 35 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 35 (better than 35% compared with alternatives), the company Software 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 Software 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 just one indicator above average for Software. Liquidity is at 50, meaning the company generates more profit to service its debt than 50% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 35, 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 65% of its competitors. Leverage is also high at a rank of 37, which means that the company has an above-average debt-to-equity ratio. It has more debt than 63% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 35 (worse than 65% compared with alternatives), Software has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Software Top Financial Performance
| COMBINED PERFORMANCE | February 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 48 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 95 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 50 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 76 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 76 (better than 76% compared with investment alternatives), Software (Systems Software, Germany) shares have much better financial characteristics than comparable stocks. Shares of Software are low in value (priced high) with a consolidated Value Rank of 48 (worse than 52% of alternatives), and are riskily financed (Safety Rank of 35, which means above-average debt burdens) but show above-average growth (Growth Rank of 95). ...read more
RECOMMENDATION: A Combined Rank of 76, is a strong buy recommendation based on Software's financial characteristics. As the company Software shows low value with an Obermatt Value Rank of 48 (52% 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 35 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 Software, even a low-value company (in terms of its key financial indicators) can be a good investment. ...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.