November 21, 2024
Top 10 Stock Covestro Hold 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: Covestro – Top 10 Stock in Deutscher Aktienindex DAX 40
Covestro is listed as a top 10 stock on November 21, 2024 in the market index DAX 40 because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 28 (28% performer), Obermatt assesses an overall hold recommendation for Covestro on November 21, 2024.
Snapshot: Obermatt Ranks
| Country | Germany |
| Industry | Specialty Chemicals |
| Index | CDAX, DAX 40, Low Emissions, Energy Efficient, Diversity Europe |
| Size class | XX-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 Covestro Hold
| 360 METRICS | November 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 18 |
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| GROWTH | ||||||||
| GROWTH | 96 |
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| SAFETY | ||||||||
| SAFETY | 22 |
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| SENTIMENT | ||||||||
| SENTIMENT | 26 |
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| 360° VIEW | ||||||||
| 360° VIEW | 28 |
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ANALYSIS: With an Obermatt 360° View of 28 (better than 28% compared with alternatives), overall professional sentiment and financial characteristics for the stock Covestro are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Covestro. The consolidated Growth Rank has a good rank of 96, 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. It ranks higher than 96% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 18 means that the share price of Covestro is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 82% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 22, which means that the company has a riskier financing structure than 78% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 26, indicating professional investors are more pessimistic about the stock than for 74% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 28, Covestro is worse than 72% of all alternative stock investment opportunities based on the Obermatt Method. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 96), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 26), the company is rather risky when it comes to financing (Safety Rank of 22). The negative market view on Covestro may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of Covestro compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth 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 (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Covestro only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 26 (better than 26% compared with alternatives), overall professional sentiment and engagement for the stock Covestro is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Covestro. Analyst Opinions are at a rank of 29 (worse than 71% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 38 which means that stock research experts are getting even more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 36, 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 64% of competitors). No wonder, the Professional Investors rank is only 30, which means that professional investors hold less stock in this company than in 70% of alternative investment opportunities. Pros tend to stay away from Covestro, which may be due to a small company size but just as likely because of its relatively low Sentiment Rank. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 26 (less encouraging than 74% compared with investment alternatives), Covestro has a reputation among professional investors that is below that of its competitors. Investors should be careful with this stock right now. Further research is required if an investment is desired, because the facts found in the professional community are all negative. ...read more
Value Strategy: Covestro Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 18 (worse than 82% compared with alternatives), Covestro shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, where the majority of metrics are below, and only one is above average for Covestro. Price-to-Sales (P/S) is 58, which means that the stock price compared with what market professionals expect for future sales is lower than 58% of comparable companies, indicating a good value concerning to Covestro's revenue size. But all other performance indicators point in a different direction. Dividend yields have a Dividend Yield rank of 24, meaning that dividends are expected to be lower than for 76% of comparable investments. Furthermore, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 57% of alternatives (only 43% of peers have an even higher ratio). The same is valid for Price-to-Profit (or Price / Earnings, P/E), which is higher than for 97% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 18, is a sell recommendation based on Covestro's stock price compared with the company's operational size and dividend yields. Since Price-to-Sales is a stable value indicator even in challenging times, investing in Covestro could be seen as a value investment. However, there must be a good reason for the low market-to-book rank. If the company has a typical capital investment practice, the stock may be overvalued because the profit and dividend-related performance indicators are also low. The stock is only good value if investors can expect profits and dividends to pick up in the future. Else, Covestro looks like an expensive investment today. ...read more
Growth Strategy: Covestro Growth Momentum high
| GROWTH METRICS | November 21, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 67 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 75 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 73 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 88 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 96 |
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ANALYSIS: With an Obermatt Growth Rank of 96 (better than 96% compared with alternatives) for 2024, Covestro 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 all four indicators above average for Covestro. Sales Growth has a value of 67, which means that, currently, professionals expect the company to grow more than 67% of its competitors. The same is valid for Profit Growth with a value of 75 and for Capital Growth with 73. In addition, Stock Returns had an above-average rank value of 88, which means they have been higher than 88% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 96, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Covestro exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Covestro Debt Financing Safety risky
| SAFETY METRICS | November 21, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 54 |
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| REFINANCING | ||||||||
| REFINANCING | 43 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 18 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 22 |
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ANALYSIS: With an Obermatt Safety Rank of 22 (better than 22% compared with alternatives), the company Covestro 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 Covestro 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 Covestro and the other two below average. Leverage is at a rank of 54 meaning the company has a below-average debt-to-equity ratio. It has less debt than 54% of its competitors.Refinancing is at a rank of 43, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 57% of its competitors. Liquidity is at a rank of 18, meaning that the company generates less profit to service its debt than 82% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 22 (worse than 78% compared with alternatives), Covestro has a financing structure that is significantly riskier than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of Covestro are on the safer side. ...read more
Combined financial peformance: Covestro Below-Average Financial Performance
| COMBINED PERFORMANCE | November 21, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 18 |
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| GROWTH | ||||||||
| GROWTH | 96 |
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| SAFETY | ||||||||
| SAFETY | 18 |
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| COMBINED | ||||||||
| COMBINED | 43 |
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ANALYSIS: With an Obermatt Combined Rank of 43 (worse than 57% compared with investment alternatives), Covestro (Specialty Chemicals, Germany) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Covestro are low in value (priced high) with a consolidated Value Rank of 18 (worse than 82% of alternatives), and are riskily financed (Safety Rank of 22, which means above-average debt burdens) but show above-average growth (Growth Rank of 96). ...read more
RECOMMENDATION: A Combined Rank of 43, is a hold recommendation based on Covestro's financial characteristics. As the company Covestro shows low value with an Obermatt Value Rank of 18 (82% 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 96% of comparable companies (Obermatt Growth Rank is 96). 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 22 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 Covestro, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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