January 18, 2024
Top 10 Stock Sonae 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: Sonae – Top 10 Stock in Low Waste Leaders
Sonae is listed as a top 10 stock on January 18, 2024 in the market index Low Waste because of its high performance in at least one of the Obermatt investment strategies. While only half of the consolidated Obermatt Ranks exhibit above-average performance, the professional market sentiment is positive and it may be a solid investment proposition, especially if a growth recovery is to be expected soon. Based on the Obermatt 360° View of 48 (48% performer), Obermatt assesses an overall hold recommendation for Sonae on January 18, 2024.
Snapshot: Obermatt Ranks
| Country | Portugal |
| Industry | Food Retail |
| Index | Dividends Europe, Low Waste, Recycling, PSI General, PSI 20 |
| Size class | X-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 Sonae Hold
| 360 METRICS | January 18, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 98 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 16 |
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| SENTIMENT | ||||||||
| SENTIMENT | 54 |
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| 360° VIEW | ||||||||
| 360° VIEW | 48 |
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ANALYSIS: With an Obermatt 360° View of 48 (better than 48% compared with alternatives), overall professional sentiment and financial characteristics for the stock Sonae are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Sonae. The consolidated Value Rank has an attractive rank of 98, which means that the share price of Sonae is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 98% of alternative stocks in the same industry. The consolidated Sentiment Rank has a good rank of 54, which means that professional investors are more optimistic about the stock than for 54% of alternative investment opportunities. But the consolidated Growth Rank has a low rank of 31, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. The consolidated Safety Rank has a riskier rank of 16, meaning the company has a riskier financing structure than 84 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 48, Sonae is worse than 52% of all alternative stock investment opportunities based on the Obermatt Method. Half of the consolidated Obermatt Ranks exhibit above-average performance, but the other half are below market levels. The company enjoys a good value (Value Rank of 98) and positive market sentiment in the professional investor community (Sentiment Rank of 54), but growth expectations are below-average (Growth Rank of 31) and the financing structure is on the risky side(Safety Rank of 16). This combination is rather dangerous, because high debt levels (low safety) require growth to finance the debt burden. The current low growth level may be temporary, because professionals are actually optimistic (positive sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. Companies with less growth typically have a lower price than fast-growing competitors. Even though professional investor sentiment is strong, we recommend further evaluating whether the future of Sonae is as challenging as the stock's low price suggests. Since the professional community is optimistic, the stock might just be going through a more challenging phase now, indicating that timing might be good now. ...read more
Sentiment Strategy: Professional Market Sentiment for Sonae positive
ANALYSIS: With an Obermatt Sentiment Rank of 54 (better than 54% compared with alternatives), overall professional sentiment and engagement for the stock Sonae 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 Sonae. Analyst Opinions are at a rank of 87 (better than 87% 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 67 which means that currently, professional investors hold more stock in this company than in 67% of alternative investment opportunities. But Analyst Opinions Change has a rank of 19, 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 Sonae. Furthermore, Market Pulse has a rank of 29, 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 71% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 54 (more positive than 54% compared with investment alternatives), Sonae 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: Sonae Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 98 (better than 98% compared with alternatives) for 2024, Sonae shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Sonae. Price-to-Sales is 67 which means that the stock price compared with what market professionals expect for future sales is lower than for 67% of comparable companies, indicating a good value for Sonae's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 83% 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 69. Compared with other companies in the same industry, dividend yields of Sonae are expected to be higher than for 98% of all competitors (a Dividend Yield rank of 98). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 98, is a buy recommendation based on Sonae'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 Sonae based on its detailed value metrics.
Growth Strategy: Sonae Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 31 (better than 31% compared with alternatives), Sonae 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 Sonae. Sales Growth has a rank of 55 which means that currently professionals expect the company to grow more than 55% of its competitors. Stock Returns are also above average with a rank of 58. But Capital Growth has only a rank of 1, which means that currently professionals expect the company to grow its invested capital less than 99% of its competitors. Profit Growth is also low, with a rank of only 42, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 31, is a hold recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 58% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more
Safety Strategy: Sonae Debt Financing Safety risky
| SAFETY METRICS | January 18, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 59 |
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| REFINANCING | ||||||||
| REFINANCING | 14 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 23 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 16 |
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ANALYSIS: With an Obermatt Safety Rank of 16 (better than 16% compared with alternatives), the company Sonae has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Sonae 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 Sonae and the other two below average. Leverage is at a rank of 59 meaning the company has a below-average debt-to-equity ratio. It has less debt than 59% of its competitors.Refinancing is at a rank of 14, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 86% of its competitors. Liquidity is at a rank of 23, meaning that the company generates less profit to service its debt than 77% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 16 (worse than 84% compared with alternatives), Sonae has a financing structure that is significantly riskier than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of Sonae are on the safer side. ...read more
Combined financial peformance: Sonae Below-Average Financial Performance
| COMBINED PERFORMANCE | January 18, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 98 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 23 |
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| COMBINED | ||||||||
| COMBINED | 43 |
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ANALYSIS: With an Obermatt Combined Rank of 43 (worse than 57% compared with investment alternatives), Sonae (Food Retail, Portugal) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Sonae are a good value (attractively priced) with a consolidated Value Rank of 98 (better than 98% of alternatives) but show below-average growth (Growth Rank of 31), and are riskily financed (Safety Rank of 16), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 43, is a hold recommendation based on Sonae's financial characteristics. As the company Sonae's key financial metrics exhibit good value (Obermatt Value Rank of 98) but low growth (Obermatt Growth Rank of 31) and risky financing practices (Obermatt Safety Rank of 16), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 98% of comparable companies, may indicate 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. ...read more
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