November 9, 2023
Top 10 Stock Westpac Banking 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: Westpac Banking – Top 10 Stock in Australian Securities Exchange Index ASX 50
Westpac Banking is listed as a top 10 stock on November 09, 2023 in the market index ASX 50 because of its high performance in at least one of the Obermatt investment strategies. Only the Obermatt Value Rank exhibits above-average performance, which means that the stock is seen as critical by the professional community and other financial facts are below average, conveying mixed investment signals. Based on the Obermatt 360° View of 10 (10% performer), Obermatt issues an overall sell recommendation for Westpac Banking on November 09, 2023.
Snapshot: Obermatt Ranks
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 Westpac Banking Sell
| 360 METRICS | November 9, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 60 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 43 |
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| SENTIMENT | ||||||||
| SENTIMENT | 10 |
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| 360° VIEW | ||||||||
| 360° VIEW | 10 |
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ANALYSIS: With an Obermatt 360° View of 10 (better than 10% compared with alternatives), overall professional sentiment and financial characteristics for the stock Westpac Banking are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Westpac Banking. Only the consolidated Value Rank has an attractive rank of 60, which means that the share price of Westpac Banking 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 60% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 15, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The consolidated Safety Rank has a riskier rank of 43, meaning the company has a riskier financing structure than 57% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, professionals are more pessimistic about the stock than for 90% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 10. ...read more
RECOMMENDATION: With a consolidated 360° View of 10, Westpac Banking is worse than 90% of all alternative stock investment opportunities based on the Obermatt Method. This means that Westpac Banking shares are on the riskier side for investors. Only one of the consolidated Obermatt Ranks exhibits above-average performance, namely the Value Rank at a level of 60. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 15), a riskier financing structure than the competition (Safety Rank of 43), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 10) is negative. This combination is sensitive to a crisis, because high debt levels (low safety) require growth to finance the debt burden. It’s no wonder that the investor community indicators are skeptical (low 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. We recommend evaluating whether the future of Westpac Banking is as challenging as the low price of the stock suggests. Since the professional community is pessimistic, you might need to worry about the future of Westpac Banking. Only invest if you have solid reasons to believe that the low growth is temporary and the current market sentiment is an overreaction, possibly due to reputational issues in the past. ...read more
Sentiment Strategy: Professional Market Sentiment for Westpac Banking negative
ANALYSIS: With an Obermatt Sentiment Rank of 10 (better than 10% compared with alternatives), overall professional sentiment and engagement for the stock Westpac Banking 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 Westpac Banking. Analyst Opinions are at a rank of 7 (worse than 93% 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 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 Westpac Banking. More encouragingly, the Professional Investors rank is 72, which means that professional investors hold more stock in this company than in 72% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 5, 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 95% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 10 (less encouraging than 90% compared with investment alternatives), Westpac Banking has a reputation among professional investors that is far below that of its competitors. The sentiment signals are mixed for Westpac Banking. 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: Westpac Banking Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 60 (better than 60% compared with alternatives), Westpac Banking shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Westpac Banking. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 87% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 47 which means that the stock price compared with what market professionals expect for future profits is higher than 53% of comparable companies, indicating a low value concerning Westpac Banking's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 49 which means that the stock price compared with what market professionals expect for future profit levels is higher than 51% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 34 is also low. Compared with invested capital, the stock price is higher than for 66% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 60, is a buy recommendation based on Westpac Banking's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Westpac Banking? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Westpac Banking only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Westpac Banking Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 15 (better than 15% compared with alternatives), Westpac Banking shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, where half of the indicators are below and half above average for Westpac Banking. Profit Growth, with a rank of 81 (better than 81% of its competitors), and Capital Growth, with a rank of 55, are both positive, which is a healthy sign for positive development. But Sales Growth has only a rank of 7, which means that, currently, professionals expect the company to grow less than 93% of its competitors, and Stock Returns are at a rank of 3. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 15, is a sell recommendation for growth and momentum investors. Stock returns that are a thing of the past can be less of a problem. Below-average revenue growth may be caused by divestments of underperforming businesses. If that is the case, then the positive developments of profit and capital growth are signs of a company with growth potential. If these are the reasons, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Westpac Banking Debt Financing Safety below-average
| SAFETY METRICS | November 9, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 17 |
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| REFINANCING | ||||||||
| REFINANCING | 96 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 51 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 43 |
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ANALYSIS: With an Obermatt Safety Rank of 43 (better than 43% compared with alternatives), the company Westpac Banking 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 Westpac Banking 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 two out of three indicators above-average for Westpac Banking. Refinancing is at 96, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 96% of its competitors. Liquidity is also good at 51, meaning the company generates more profit to service its debt than 51% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 17, which means the company has an above-average debt-to-equity ratio. It has more debt than 83% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 43 (worse than 57% compared with alternatives), Westpac Banking has a financing structure that is riskier than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Westpac Banking could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Westpac Banking Below-Average Financial Performance
| COMBINED PERFORMANCE | November 9, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 60 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 51 |
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| COMBINED | ||||||||
| COMBINED | 29 |
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ANALYSIS: With an Obermatt Combined Rank of 29 (worse than 71% compared with investment alternatives), Westpac Banking (Diversified Banks, Australia) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Westpac Banking are a good value (attractively priced) with a consolidated Value Rank of 60 (better than 60% of alternatives) but show below-average growth (Growth Rank of 15), and are riskily financed (Safety Rank of 43), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 29, is a hold recommendation based on Westpac Banking's financial characteristics. As the company Westpac Banking's key financial metrics exhibit good value (Obermatt Value Rank of 60) but low growth (Obermatt Growth Rank of 15) and risky financing practices (Obermatt Safety Rank of 43), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 60% 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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