May 18, 2023
Top 10 Stock Subsea 7 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: Subsea 7 – Top 10 Stock in OBX Index
Subsea 7 is listed as a top 10 stock on May 18, 2023 in the market index OBX Index because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 56 (high 56% performer), Obermatt assesses an overall buy recommendation for Subsea 7 on May 18, 2023.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Oil & Gas Equipment |
| Index | Low Emissions, Human Rights, Sound Pay Europe, OBX Index |
| 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° Assessment Subsea 7 Buy
| 360 METRICS | May 18, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 31 |
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| GROWTH | ||||||||
| GROWTH | 77 |
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| SAFETY | ||||||||
| SAFETY | 71 |
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| SENTIMENT | ||||||||
| SENTIMENT | 23 |
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| 360° VIEW | ||||||||
| 360° VIEW | 56 |
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ANALYSIS: With an Obermatt 360° View of 56 (better than 56% compared with alternatives), overall professional sentiment and engagement for the stock Subsea 7 are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Subsea 7. The consolidated Growth Rank has a good rank of 77, 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 77% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 71 which means that the company has a financing structure that is safer than 71 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 31 which means that the share price of Subsea 7 is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 69% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 23, which means that professional investors are more pessimistic about the stock than for 77% of alternative investment opportunities. ...read more
RECOMMENDATION: With a 360° View of 56, Subsea 7 is better than 56% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 77), and the company is safely financed (Safety Rank of 71). However, professional market sentiment is critical (Sentiment Rank of 23). The negative market view on Subsea 7 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 board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because 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 Subsea 7 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 Subsea 7 negative
ANALYSIS: With an Obermatt Sentiment Rank of 23 (better than 23% compared with alternatives), overall professional sentiment and engagement for the stock Subsea 7 is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Subsea 7. Analyst Opinions are at a rank of 44 (worse than 56% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 24 which means that stock research experts are getting even more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 22, 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 78% of competitors). No wonder, the Professional Investors rank is only 39, which means that professional investors hold less stock in this company than in 61% of alternative investment opportunities. Pros tend to stay away from Subsea 7, which may be due to a small company size but just as likely because of its relatively low Sentiment Rank. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 23 (less encouraging than 77% compared with investment alternatives), Subsea 7 has a reputation among professional investors that is far below that of its competitors. Investors should be careful with this stock right now. Further research is required if an investment is desired, because the facts found in the professional community are all negative. ...read more
Value Strategy: Subsea 7 Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 31 (worse than 69% compared with alternatives), Subsea 7 shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Subsea 7. Price-to-Sales (P/S) is 59, which means that the stock price compared with what market professionals expect for future sales is lower than for 59% of comparable companies, indicating a good value concerning Subsea 7's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio), which is more favorable than for 67% of alternatives (33% of peers have a higher ratio). But expected dividend yields with a Dividend Yield rank of 39 are lower than average (dividends are expected to be lower than 61% of other stocks) while the Price to Profit ratio (or Price to Earnings (P/E) ratio) is higher than average with a Price-to-Profit Rank of 5, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 31, is a HOLD recommendation based on Subsea 7's stock price compared with the company's operational size and dividend yields. Low profits and low dividends as seen here for Subsea 7 may indicate a restructuring phase. This could be transitory, making the company a good value when profits recover and dividends return to higher levels. If the stock price is compared with the size indicators for revenue and invested capital, it is on the lower side, making this stock a good value investment (apart from current profit and dividend expectations). ...read more
Growth Strategy: Subsea 7 Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 77 (better than 77% compared with alternatives) for 2023, Subsea 7 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 Subsea 7. Sales Growth has a rank of 80 which means that currently, professionals expect the company to grow more than 80% of its competitors. Both Profit Growth, with a rank of 69, and Stock Returns, with a rank of 81, are also above average. But Capital Growth only has a rank of 8, which means that, currently, professionals expect the company to grow its invested capital less than 92% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 77, is a BUY recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: Subsea 7 Debt Financing Safety above-average
| SAFETY METRICS | May 18, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 85 |
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| REFINANCING | ||||||||
| REFINANCING | 48 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 46 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 71 |
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ANALYSIS: With an Obermatt Safety Rank of 71 (better than 71% compared with alternatives), the company Subsea 7 has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Subsea 7 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 just one indicator above average for Subsea 7 and the other two below average. Leverage is at a rank of 85 meaning the company has a below-average debt-to-equity ratio. It has less debt than 85% of its competitors.Refinancing is at a rank of 48, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 52% of its competitors. Liquidity is at a rank of 46, meaning that the company generates less profit to service its debt than 54% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 71 (better than 71% compared with alternatives), Subsea 7 has a financing structure that is safer 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 Subsea 7 are on the safer side. ...read more
Combined financial peformance: Subsea 7 Above-Average Financial Performance
| COMBINED PERFORMANCE | May 18, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 31 |
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| GROWTH | ||||||||
| GROWTH | 77 |
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| SAFETY | ||||||||
| SAFETY | 46 |
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| COMBINED | ||||||||
| COMBINED | 69 |
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ANALYSIS: With an Obermatt Combined Rank of 69 (better than 69% compared with investment alternatives), Subsea 7 (Oil & Gas Equipment, United Kingdom) shares have above-average financial characteristics compared with similar stocks. Shares of Subsea 7 are low in value (priced high) with a consolidated Obermatt Value Rank of 31 (worse than 69% of alternatives). But they show above-average growth (Growth Rank of 77) and are safely financed (Safety Rank of 71, which means below-average debt burdens). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 69, is a buy recommendation based on Subsea 7's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Subsea 7 exhibits low value (Obermatt Value Rank of 31), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 77). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 71) 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
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