September 14, 2023
Top 10 Stock Umicore Buy Recommendation

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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 Umicore Buy

360 METRICS	September 14, 2023
VALUE
VALUE	47
GROWTH
GROWTH	89
SAFETY
SAFETY	37
SENTIMENT
SENTIMENT	54
360° VIEW
360° VIEW	70

ANALYSIS: With an Obermatt 360° View of 70 (better than 70% compared with alternatives), overall professional sentiment and financial characteristics for the stock Umicore are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Umicore. The consolidated Growth Rank has a good rank of 89, 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 89% of competitors in the same industry. The consolidated Sentiment Rank also 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 Value Rank has a less desirable rank of 47, which means that the share price of Umicore is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 53% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 37, which means that the company has a financing structure that is riskier than those of 63% 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 70, Umicore is better positioned than 70% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 89), and professional market sentiment is positive (Sentiment Rank of 54), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value 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 if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more

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Sentiment Strategy: Professional Market Sentiment for Umicore positive

SENTIMENT METRICS	September 14, 2023
ANALYST OPINION
ANALYST OPINION	17
OPINIONS CHANGE
OPINIONS CHANGE	50
PRO HOLDINGS
PRO HOLDINGS	64
MARKET PULSE
MARKET PULSE	75
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	54

ANALYSIS: With an Obermatt Sentiment Rank of 54 (better than 54% compared with alternatives), overall professional sentiment and engagement for the stock Umicore is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Umicore. Analyst Opinions are at a rank of 17 (worse than 83% 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 50, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Umicore. Even better, the Professional Investors rank is 64, meaning that professional investors hold more stock in this company than in 64% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 75, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 75% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 54 (more positive than 54% compared with investment alternatives), Umicore 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

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Value Strategy: Umicore Stock Price Value below-average critical

VALUE METRICS	September 14, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	33
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	51
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	43
DIVIDEND YIELD
DIVIDEND YIELD	74
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	47

ANALYSIS: With an Obermatt Value Rank of 47 (worse than 53% compared with alternatives), Umicore 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 Umicore. Price-to-Profit (also referred to as price-earnings, P/E) is 51 which means that the stock price compared with what market professionals expect for future profits is lower than for 51% of comparable companies, indicating a good value concerning Umicore's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 43, which means that the stock price is lower as regards to invested capital than for 43% of comparable investments. On the other hand, Price-to-Sales is less favorable than 67% of alternatives (only 33% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 26% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 47, is a hold recommendation based on Umicore's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more

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Growth Strategy: Umicore Growth Momentum high

GROWTH METRICS	September 14, 2023
REVENUE GROWTH
REVENUE GROWTH	87
PROFIT GROWTH
PROFIT GROWTH	48
CAPITAL GROWTH
CAPITAL GROWTH	100
STOCK RETURNS
STOCK RETURNS	25
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	89

ANALYSIS: With an Obermatt Growth Rank of 89 (better than 89% compared with alternatives) for 2023, Umicore 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 half of the indicators below and half above average for Umicore. Sales Growth has a rank of 87 which means that currently, professionals expect the company to grow more than 87% of its competitors. Capital Growth is also above 48% of competitors with a rank of 100. But Profit Growth only has a rank of 48, which means that currently professionals expect the company to grow its profits less than 52% of its competitors. And Stock Returns have also been below average with a rank of only 25. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 89, is a buy recommendation for growth and momentum investors. Profits are sometimes low if the company invests in the future. The positive revenue and capital investment outlook confirms such an interpretation. Both revenues and capital are solid growth indicators, and lower profits in such a case would be encouraging. But the investors see it differently by punishing the share price. Sometimes, Mister Market is not very reliable, because it is not uncommon for it to be volatile. Investors should look out for signs of growth expenditure that could justify low profit growth, and they may also find reasons why recent stock price developments don't confirm the growth outlook of operations. While operating growth indicators are not perfect, they are more reliable indicators for future performance than stock prices that can repeatedly surprise investors. ...read more

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Safety Strategy: Umicore Debt Financing Safety below-average

SAFETY METRICS	September 14, 2023
LEVERAGE
LEVERAGE	28
REFINANCING
REFINANCING	69
LIQUIDITY
LIQUIDITY	37
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	37

ANALYSIS: With an Obermatt Safety Rank of 37 (better than 37% compared with alternatives), the company Umicore 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 Umicore 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 Umicore and the other two below average. Refinancing is at 69, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 69% of its competitors. But Leverage is high with a rank of 28, meaning the company has an above-average debt-to-equity ratio. It has more debt than 72% of its competitors. Liquidity is also on the riskier side with a rank of 37, meaning the company generates less profit to service its debt than 63% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 37 (worse than 63% compared with alternatives), Umicore has a financing structure that is riskier than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for Umicore are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. ...read more

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Combined financial peformance: Umicore Above-Average Financial Performance

COMBINED PERFORMANCE	September 14, 2023
VALUE
VALUE	47
GROWTH
GROWTH	89
SAFETY
SAFETY	37
COMBINED
COMBINED	69

ANALYSIS: With an Obermatt Combined Rank of 69 (better than 69% compared with investment alternatives), Umicore (Specialty Chemicals, Belgium) shares have above-average financial characteristics compared with similar stocks. Shares of Umicore are low in value (priced high) with a consolidated Value Rank of 47 (worse than 53% of alternatives), and are riskily financed (Safety Rank of 37, which means above-average debt burdens) but show above-average growth (Growth Rank of 89). ...read more

RECOMMENDATION: A Combined Rank of 69, is a buy recommendation based on Umicore's financial characteristics. As the company Umicore shows low value with an Obermatt Value Rank of 47 (53% 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 89% of comparable companies (Obermatt Growth Rank is 89). 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 37 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 Umicore, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more

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