May 11, 2023
Top 10 Stock The AZEK Sell 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: The AZEK – Top 10 Stock in Wood & Timber Industry
The AZEK is listed as a top 10 stock on May 11, 2023 in the market index Timber Industry 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° Rank of 18 (18% performer), Obermatt issues an overall sell recommendation for The AZEK on May 11, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Building Products |
| Index | Employee Focus US, Timber Industry |
| 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° Assessment The AZEK Sell
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 6 |
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| GROWTH | ||||||||
| GROWTH | 73 |
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| SAFETY | ||||||||
| SAFETY | 17 |
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| SENTIMENT | ||||||||
| SENTIMENT | 44 |
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| 360° VIEW | ||||||||
| 360° VIEW | 18 |
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ANALYSIS: With an Obermatt 360° Rank of 18 (better than 18% compared with alternatives), overall professional sentiment and engagement for the stock The AZEK are critical, mostly below average. The 360° Rank is based on consolidating four consolidated indicators, with three out of four indicators below average for The AZEK. The consolidated Growth Rank has a good rank of 73, 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 73% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 6 means that the share price of The AZEK is on the high side compared with its peer regarding revenues, profits, and invested capital. The stock price is higher than 94% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 17, which means that the company has a riskier financing structure than 83% 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 44, indicating professional investors are more pessimistic about the stock than for 56% of alternative investment opportunities. ...read more
RECOMMENDATION: With a 360° Rank of 18, The AZEK is worse than 82% of all alternative stock investment opportunities based on the Obermatt Method. This means that The AZEK shares are on the riskier side for investors. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 73), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 44), the company is rather risky when it comes to financing (Safety Rank of 17). The negative market view on The AZEK 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 The AZEK 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 The AZEK only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 44 (better than 44% compared with alternatives), overall professional sentiment and engagement for the stock The AZEK is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for The AZEK. Analyst Opinions are at a rank of 75 (better than 75% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 55, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 55% of competitors). But Analyst Opinions Change is negative with a rank of 43, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in The AZEK. There are also only so many institutional investors holding company stock with a Professional Investors rank of 26, which means that, currently, professional investors hold less stock in this company than in 74% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 44 (less encouraging than 56% compared with investment alternatives), The AZEK has a reputation among professional investors that is below that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more
Value Strategy: The AZEK Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 6 (worse than 94% compared with alternatives), The AZEK 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 The AZEK. Price-to-Sales has a value of 9 which means that the stock price compared with what market professionals expect for future profits is higher than 91% of comparable companies, indicating a low value concerning The AZEK's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Obermatt Price-to-Book Rank of 32, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of The AZEK. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 9 and Dividend Yield, which is lower than 99% 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 6, is a SELL recommendation based on The AZEK's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for The AZEK? 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 new and exciting products where everybody wants a piece of the action. Should you pay a lot for a hot stock such as The AZEK? It's risky, and even if it continues to grow because of popular demand, it will most likely return to what it's worth. 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 reasonable for the company to dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. The AZEK 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: The AZEK Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 73 (better than 73% compared with alternatives), The AZEK shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for The AZEK. Sales Growth has a rank of 80 which means that currently, professionals expect the company to grow more than 80% of its competitors. Capital Growth is also above 14% of competitors with a rank of 78, and Stock Returns with the rank of 75 is also an outperformance. Only Profit Growth is low with a rank of 14 which means that currently, professionals expect the company to grow its profits less than 86% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 73, 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 communications about extra growth efforts costing time and money. If that is the case, The AZEK is a good growth stock. ...read more
Safety Strategy: The AZEK Debt Financing Safety risky
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 60 |
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| REFINANCING | ||||||||
| REFINANCING | 16 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 28 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 17 |
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ANALYSIS: With an Obermatt Safety Rank of 17 (better than 17% compared with alternatives), the company The AZEK 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 The AZEK 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 The AZEK and the other two below average. Leverage is at a rank of 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 16, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 84% of its competitors. Liquidity is at a rank of 28, meaning that the company generates less profit to service its debt than 72% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 17 (worse than 83% compared with alternatives), The AZEK 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 The AZEK are on the safer side. ...read more
Combined financial peformance: The AZEK Lowest Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 6 |
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| GROWTH | ||||||||
| GROWTH | 73 |
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| SAFETY | ||||||||
| SAFETY | 28 |
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| COMBINED | ||||||||
| COMBINED | 8 |
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ANALYSIS: With an Obermatt Combined Rank of 8 (worse than 92% compared with investment alternatives), The AZEK (Building Products, USA) shares have lower financial characteristics compared with similar stocks. Shares of The AZEK are low in value (priced high) with a consolidated Obermatt Value Rank of 6 (worse than 94% of alternatives), and are riskily financed (Safety Rank of 17, which means above-average debt burdens) but show above-average growth (Growth Rank of 73). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 8, is a sell recommendation based on The AZEK's financial characteristics. As the company The AZEK shows low value with an Obermatt Value Rank of 6 (94% 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 73% of comparable companies (Obermatt Growth Rank is 73). This is a typical case. Companies with above average growth tend to cost more than the sluggish variety. If this is a high-growth company, the low Obermatt Safety Rank of 17 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 The AZEK, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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