March 28, 2024
Top 10 Stock Capital Power Strong 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: Capital Power – Top 10 Stock in Renewable Energy Use Leaders
Capital Power is listed as a top 10 stock on March 28, 2024 in the market index Renewables Users 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, despite a currently slow growth momentum. Based on the Obermatt 360° View of 92 (top 92% performer), Obermatt assesses an overall strong buy recommendation for Capital Power on March 28, 2024.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | Power Producers & Traders |
| Index | Low Emissions, Renewables Users, TSX Composite |
| 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° View Capital Power Strong Buy
| 360 METRICS | March 28, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 76 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 15 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 99 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 84 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 92 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 92 (better than 92% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Capital Power are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Capital Power. The consolidated Value Rank has an attractive rank of 76, which means that the share price of Capital Power is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 76% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 99. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 84. But the consolidated Growth Rank has a low rank of 15, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 85 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 92, Capital Power is better positioned than 92% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 76), secure financing practices (Safety Rank of 99), and positive market sentiment in the professional investor community (Sentiment Rank of 84). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 15), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Capital Power is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Capital Power very positive
ANALYSIS: With an Obermatt Sentiment Rank of 84 (better than 84% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Capital Power is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Capital Power. Analyst Opinions are at a rank of 27 (worse than 73% 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 78, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Capital Power. Even better, the Professional Investors rank is 84, meaning that professional investors hold more stock in this company than in 84% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 64, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 64% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 84 (more positive than 84% compared with investment alternatives), Capital Power has a reputation among professional investors that is significantly higher than 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
Value Strategy: Capital Power Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 76 (better than 76% compared with alternatives) for 2024, Capital Power shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Capital Power. Price-to-Profit (also referred to as price-earnings, P/E) is 89 which means that the stock price compared with what market professionals expect for future profits is lower than for 89% of comparable companies, indicating a good value concerning Capital Power'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 41, which means that the stock price is lower as regards to invested capital than for 41% of comparable investments. On the other hand, Price-to-Sales is less favorable than 54% of alternatives (only 46% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 10% 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 76, is a buy recommendation based on Capital Power'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: Capital Power Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 15 (better than 15% compared with alternatives), Capital Power 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 half of the indicators below and half above average for Capital Power. Sales Growth has a rank of 59 which means that currently professionals expect the company to grow more than 59% of its competitors. Stock Returns are also above average with a rank of 66. But Capital Growth has only a rank of 4, which means that currently professionals expect the company to grow its invested capital less than 96% of its competitors. Profit Growth is also low, with a rank of only 10, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 15, is a sell recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 66% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more
Safety Strategy: Capital Power Debt Financing Safety very solid
| SAFETY METRICS | March 28, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 50 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 97 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 98 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 99 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 99 (better than 99% compared with alternatives) for 2024, the company Capital Power has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Capital Power 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, where all three are above average for Capital Power. Leverage is at 50, meaning the company has a below-average debt-to-equity ratio. It has less debt than 50% of its competitors. Refinancing is at a rank of 97, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 97% of its competitors. Finally, Liquidity is also good at a rank of 98, which means that the company generates more profit to service its debt than 98% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 99 (better than 99% compared with alternatives), Capital Power has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Capital Power Top Financial Performance
| COMBINED PERFORMANCE | March 28, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 76 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 15 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 98 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 86 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 86 (better than 86% compared with investment alternatives), Capital Power (Power Producers & Traders, Canada) shares have much better financial characteristics than comparable stocks. Shares of Capital Power are a good value (attractively priced) with a consolidated Value Rank of 76 (better than 76% of alternatives), are safely financed (Safety Rank of 99, which means low debt burdens), but show below-average growth (Growth Rank of 15). ...read more
RECOMMENDATION: A Combined Rank of 86, is a strong buy recommendation based on Capital Power's financial characteristics. As the company Capital Power's key financial metrics exhibit good value (Obermatt Value Rank of 76) but low growth (Obermatt Growth Rank of 15) while being safely financed (Obermatt Safety Rank of 99), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 76% of comparable companies, may also indicate that 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 and the downside is limited due to below-average financing risks. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.