Fact based stock research
Westpac Banking (ASX:WBC)

AU000000WBC1

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.

Westpac Banking stock research in summary

westpac.com.au

ANALYSIS: With an Obermatt Combined Rank of 28 (worse than 72% 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 low in value (priced high) with a consolidated Value Rank of 36 (worse than 64% of alternatives) and show below-average growth (Growth Rank of 12) but are safely financed (Safety Rank of 70), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 28, is a hold recommendation based on Westpac Banking's financial characteristics. As the company Westpac Banking's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 36) and low growth (Obermatt Growth Rank of 12), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 70) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	36
Growth Rank	12
Safety Rank	70
Combined Rank	28

Country	Australia
Industry	Diversified Banks
Index	ASX 100, ASX 200, ASX 300, ASX 50, NZSX 50
Size class	XX-Large

This stock has achievements: Top 10 Stock.

18-Apr-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

Multiple opinions. One number.

Analysts rarely agree on a stock’s future. So, who do you believe? Obermatt translates those collective views into a single Sentiment Rank. That plus the financial ranks give you the ultimate 360° View. Sign up to access them.

Why popular stocks have low ratings

It’s easier said than done. When your stock drops, it’s easy to want to sell it and find a better performer. Think twice, or even three times, before trading. Those fees (especially the hidden ones) can eat up your gains.

Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Westpac Banking

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	29	43	34	36
GROWTH
GROWTH	98	22	9	12
SAFETY
SAFETY	23	39	54	70
SENTIMENT
SENTIMENT	n/a	12	12	^new
360° VIEW
360° VIEW	n/a	1	8	^new

Most recent update of the stock research: 18-Apr-2024. Financial reporting date used for calculating ranks: 31-Dec-2023. Stock research history is based on the Obermatt Method. The higher the rank, the better Westpac Banking is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	29	43	34	36
GROWTH
GROWTH	98	22	9	12
SAFETY
SAFETY	23	39	54	70
COMBINED
COMBINED	45	17	20	28

Last update of combined financial performance: 18-Apr-2024. Stock analysis on combined financial performance: The higher the rank of Westpac Banking the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 36 (worse than 64% compared with alternatives), Westpac Banking shares are more expensive than the average comparable stock. 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 82% 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 33 which means that the stock price compared with what market professionals expect for future profits is higher than 67% 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 32 which means that the stock price compared with what market professionals expect for future profit levels is higher than 68% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 26 is also low. Compared with invested capital, the stock price is higher than for 74% of comparable investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 36, is a hold 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. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	25	36	34	33
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	10	34	33	32
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	46	38	28	26
DIVIDEND YIELD
DIVIDEND YIELD	42	83	81	82
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	29	43	34	36

Last update of Value Rank: 18-Apr-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Westpac Banking; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 12 (better than 12% 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, with three out of four indicators below average for Westpac Banking. Only Capital Growth has a good rank of 67, which means that currently professionals expect the company to grow its invested capital more than 9% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 22 which means that currently professionals expect the company to grow less than 78% of its competitors. Profit Growth with a rank of 9 and Stock Returns with a rank of 39 are also low (below 61% of alternative investments). ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 12, is a sell recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Westpac Banking is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is limited here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	83	32	28	22
PROFIT GROWTH
PROFIT GROWTH	65	26	8	9
CAPITAL GROWTH
CAPITAL GROWTH	n/a	77	75	67
STOCK RETURNS
STOCK RETURNS	70	19	17	39
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	98	22	9	12

Last update of Growth Rank: 18-Apr-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Westpac Banking.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 70 (better than 70% compared with alternatives), the company Westpac Banking 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 Westpac Banking 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 two out of three indicators above-average for Westpac Banking. Refinancing is at 100, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 100% of its competitors. Liquidity is also good at 69, meaning the company generates more profit to service its debt than 69% 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 70 (better than 70% compared with alternatives), Westpac Banking has a financing structure that is safer 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. In the long-term, investors may have a debt challenge with Westpac Banking and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	36	17	20	17
REFINANCING
REFINANCING	58	96	100	100
LIQUIDITY
LIQUIDITY	19	49	56	69
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	23	39	54	70

Last update of Safety Rank: 18-Apr-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Westpac Banking and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	31	7	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	72	29	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	29	74	^new
MARKET PULSE
MARKET PULSE	n/a	10	34	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	12	12	^new

Last update of Sentiment Rank: 18-Apr-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Westpac Banking.
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