September 12, 2024
Top 10 Stock Ashtead 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: Ashtead – Top 10 Stock in FTSE 100 Index
Ashtead is listed as a top 10 stock on September 12, 2024 in the market index FTSE 100 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low. Based on the Obermatt 360° View of 71 (high 71% performer), Obermatt assesses an overall buy recommendation for Ashtead on September 12, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Trading & Distribution |
| Index | FTSE All Shares, FTSE 100, FTSE 350, Dividends Europe |
| 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° View Ashtead Buy
| 360 METRICS | September 12, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 65 |
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| GROWTH | ||||||||
| GROWTH | 55 |
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| SAFETY | ||||||||
| SAFETY | 17 |
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| SENTIMENT | ||||||||
| SENTIMENT | 87 |
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| 360° VIEW | ||||||||
| 360° VIEW | 71 |
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ANALYSIS: With an Obermatt 360° View of 71 (better than 71% compared with alternatives), overall professional sentiment and financial characteristics for the stock Ashtead are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Ashtead. The consolidated Value Rank has an attractive rank of 65, which means that the share price of Ashtead is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 65% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 55, 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. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 87. But the company’s financing is risky with a Safety rank of 17. This means 83% of comparable companies have a safer financing structure than Ashtead. ...read more
RECOMMENDATION: With a consolidated 360° View of 71, Ashtead is better positioned than 71% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 65), above-average growth (Growth Rank of 55), and positive market sentiment in the professional investor community (Sentiment Rank of 87), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 17), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of Ashtead is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Ashtead very positive
ANALYSIS: With an Obermatt Sentiment Rank of 87 (better than 87% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Ashtead is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Ashtead. Analyst Opinions are at a rank of 53 (better than 53% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 50, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Ashtead. The Professional Investors rank is 98, which means that currently, professional investors hold more stock in this company than in 98% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 76 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 76% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 87 (more positive than 87% compared with investment alternatives), Ashtead has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Ashtead stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: Ashtead Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 65 (better than 65% compared with alternatives), Ashtead shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Ashtead. Price-to-Profit (also referred to as price-earnings, P/E) is 50 which means that the stock price compared with what market professionals expect for future profits is lower than for 50% of comparable companies, indicating a good value concerning Ashtead'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 38, which means that the stock price is lower as regards to invested capital than for 38% of comparable investments. On the other hand, Price-to-Sales is less favorable than 61% of alternatives (only 39% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 24% 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 65, is a buy recommendation based on Ashtead'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
Growth Strategy: Ashtead Growth Momentum good
| GROWTH METRICS | September 12, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 49 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 33 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 76 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 49 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 55 |
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ANALYSIS: With an Obermatt Growth Rank of 55 (better than 55% compared with alternatives), Ashtead 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 three out of four indicators below average for Ashtead. Only Capital Growth has a good rank of 76, which means that currently professionals expect the company to grow its invested capital more than 33% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 49 which means that currently professionals expect the company to grow less than 51% of its competitors. Profit Growth with a rank of 33 and Stock Returns with a rank of 49 are also low (below 51% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 55, is a buy 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 Ashtead 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. ...read more
Safety Strategy: Ashtead Debt Financing Safety risky
| SAFETY METRICS | September 12, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 14 |
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| REFINANCING | ||||||||
| REFINANCING | 20 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 49 |
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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 Ashtead 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 Ashtead 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 all three metrics below average for Ashtead. Liquidity is at 49, meaning that the company generates less profit to service its debt than 51% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 14, meaning the company has an above-average debt-to-equity ratio. It has more debt than 86% of its competitors. Finally, Refinancing is at a rank of 20 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 80% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 17 (worse than 83% compared with alternatives), Ashtead has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing.
Combined financial peformance: Ashtead Below-Average Financial Performance
| COMBINED PERFORMANCE | September 12, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 65 |
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| GROWTH | ||||||||
| GROWTH | 55 |
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| SAFETY | ||||||||
| SAFETY | 49 |
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| COMBINED | ||||||||
| COMBINED | 37 |
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ANALYSIS: With an Obermatt Combined Rank of 37 (worse than 63% compared with investment alternatives), Ashtead (Trading & Distribution, United Kingdom) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Ashtead are a good value (attractively priced) with a consolidated Value Rank of 65 (better than 65% of alternatives), show above-average growth (Growth Rank of 55) but are riskily financed (Safety Rank of 17), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 37, is a hold recommendation based on Ashtead's financial characteristics. As the company Ashtead's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 65) and above-average growth (Obermatt Growth Rank of 55), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 17) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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