Fact based stock research
Direct Line Insurance (LSE:DLG)

GB00BY9D0Y18

How to read the free 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.

Direct Line Insurance stock research in summary

directlinegroup.co.uk

ANALYSIS: With an Obermatt Combined Rank of 71 (better than 71% compared with investment alternatives), Direct Line Insurance (Property & Casualty Insurance, United Kingdom) shares have above-average financial characteristics compared with similar stocks. Shares of Direct Line Insurance are low in value (priced high) with a consolidated Value Rank of 33 (worse than 67% of alternatives), show below-average growth (Growth Rank of 29), and are riskily financed (Safety Rank of 31), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 71, is a buy recommendation based on Direct Line Insurance's financial characteristics. As the company Direct Line Insurance's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 33), low growth (Obermatt Growth Rank of 29), and risky financing practices (Obermatt Safety Rank of 31), 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. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to 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	33
Growth Rank	29
Safety Rank	31
Combined Rank	71

Country	United Kingdom
Industry	Property & Casualty Insurance
Index	FTSE All Shares, FTSE 250, FTSE 350, Dividends Europe
Size class	X-Large

This stock has achievements: Gold Winner CEO.

19-Dec-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: Direct Line Insurance

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	39	47	51	33
GROWTH
GROWTH	7	5	37	29
SAFETY
SAFETY	74	31	31	31
SENTIMENT
SENTIMENT	n/a	45	15	^new
360° VIEW
360° VIEW	n/a	15	37	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Direct Line Insurance is in the corresponding investment strategy.
Upgrade to a Premium Account to access the latest ranks.

Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	39	47	51	33
GROWTH
GROWTH	7	5	37	29
SAFETY
SAFETY	74	31	31	31
COMBINED
COMBINED	37	71	71	71

Last update of combined financial performance: 6-Oct-2022. Stock analysis on combined financial performance: The higher the rank of Direct Line Insurance the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 33 (worse than 67% compared with alternatives), Direct Line Insurance shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Direct Line Insurance. Price-to-Sales is 46 which means that the stock price compared with what market professionals expect for future profits is higher than 54% of comparable companies, indicating a low value concerning Direct Line Insurance's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 46, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Direct Line Insurance. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 28 and Dividend Yield, which is lower than 69% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 33, is a hold recommendation based on Direct Line Insurance's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Direct Line Insurance? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Direct Line Insurance? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Direct Line Insurance may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. 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)	14	35	51	46
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	61	41	31	28
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	27	31	55	46
DIVIDEND YIELD
DIVIDEND YIELD	94	93	76	31
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	39	47	51	33

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Direct Line Insurance; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 29 (better than 29% compared with alternatives), Direct Line Insurance shows a below-average growth dynamic in its industry. There is limited 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 Direct Line Insurance. Capital Growth has a rank of 79, which means that currently professionals expect the company to grow its invested capital more than 8% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 75 (above 75% of alternative investments). But Sales Growth has only a rank of 6, which means that, currently, professionals expect the company to grow less than 94% of its competitors, and Profit Growth is also low at a rank of 8. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 29, is a hold recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Direct Line Insurance, investors may want to look at value and sentiment indicators for a well-rounded picture of this 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 mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	15	55	8	6
PROFIT GROWTH
PROFIT GROWTH	23	22	98	8
CAPITAL GROWTH
CAPITAL GROWTH	n/a	17	49	79
STOCK RETURNS
STOCK RETURNS	14	13	7	75
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	7	5	37	29

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Direct Line Insurance.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 31 (better than 31% compared with alternatives), the company Direct Line Insurance 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 Direct Line Insurance 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 Direct Line Insurance and the other two below average. Leverage is at a rank of 84 meaning the company has a below-average debt-to-equity ratio. It has less debt than 84% of its competitors.Refinancing is at a rank of 8, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 92% of its competitors. Liquidity is at a rank of 4, meaning that the company generates less profit to service its debt than 96% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 31 (worse than 69% compared with alternatives), Direct Line Insurance has a financing structure that is 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 Direct Line Insurance are on the safer side. Investors may have a short-term debt challenge and liquidity issues with Direct Line Insurance 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	72	52	82	84
REFINANCING
REFINANCING	35	8	8	8
LIQUIDITY
LIQUIDITY	72	59	1	4
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	74	31	31	31

Last update of Safety Rank: 6-Oct-2022. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Direct Line Insurance 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	78	28	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	7	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	79	7	^new
MARKET PULSE
MARKET PULSE	n/a	26	43	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	45	15	^new

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Direct Line Insurance.
Upgrade to a Premium Account to access the latest ranks.