May 11, 2023
Top 10 Stock Downer EDI Sell 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: Downer EDI – Top 10 Stock in Australian Securities Exchange Index ASX 100
Downer EDI is listed as a top 10 stock on May 11, 2023 in the market index ASX 100 because of its high performance in at least one of the Obermatt investment strategies. Only the Obermatt Value Rank exhibits above-average performance, which means that the stock is seen as critical by the professional community and other financial facts are below average, providing mixed investment signals. Based on the Obermatt 360° Rank of 7 (7% performer), Obermatt issues an overall sell recommendation for Downer EDI on May 11, 2023.
Snapshot: Obermatt Ranks
| Country | Australia |
| Industry | Diversified Support Services |
| Index | ASX 100, ASX 200, ASX 300, Water Tech |
| 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° Assessment Downer EDI Sell
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 7 |
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| SAFETY | ||||||||
| SAFETY | 20 |
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| SENTIMENT | ||||||||
| SENTIMENT | 6 |
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| 360° VIEW | ||||||||
| 360° VIEW | 7 |
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ANALYSIS: With an Obermatt 360° Rank of 7 (better than 7% compared with alternatives), overall professional sentiment and engagement for the stock Downer EDI are critical, mostly below average. The 360° Rank is based on consolidating four consolidated indicators, with three out of four indicators below average for Downer EDI. Only the consolidated Value Rank has an attractive rank of 100, which means that the share price of Downer EDI is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 100% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 7, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The consolidated Safety Rank has a riskier rank of 20, meaning the company has a riskier financing structure than 80% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, professionals are more pessimistic about the stock than for 94% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 6. ...read more
RECOMMENDATION: With a 360° Rank of 7, Downer EDI is worse than 93% of all alternative stock investment opportunities based on the Obermatt Method. This means that Downer EDI shares are on the riskier side for investors. Only one of the consolidated Obermatt Ranks exhibits above-average performance, namely the Value Rank at a level of 100. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 7), a riskier financing structure (Safety Rank of 20), and negative market sentiment in the professional investor community (Sentiment Rank of 6). This combination is sensitive to a crisis, because high debt levels (low safety) require growth to finance the debt burden. It’s no wonder that the investor community indicators are skeptical (low sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. We recommend evaluating whether the future of Downer EDI is as challenging as the low price of the stock suggests. Since the professional community is pessimistic, you might need to worry about the future of Downer EDI. Only invest if you have solid reasons to believe that the sluggish growth is temporary and the current market sentiment is an overreaction, possibly due to reputational issues in the past. ...read more
Sentiment Strategy: Professional Market Sentiment for Downer EDI negative
ANALYSIS: With an Obermatt Sentiment Rank of 6 (better than 6% compared with alternatives), overall professional sentiment and engagement for the stock Downer EDI is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Downer EDI. Analyst Opinions are at a rank of 36 (worse than 64% 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 13, 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 87% of competitors). No wonder, the Professional Investors rank is only 13, which means that professional investors hold less stock in this company than in 87% of alternative investment opportunities. Pros tend to stay away from Downer EDI, which may be due to a small company size but just as likely because of its relatively low Sentiment Rank. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 6 (less encouraging than 94% compared with investment alternatives), Downer EDI has a reputation among professional investors that is far 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: Downer EDI Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 100 (better than 100% compared with alternatives) for 2023, Downer EDI shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Downer EDI. Price-to-Sales has a value of 97 which means that the stock price compared with what market professionals expect for future sales is lower than 97% of comparable companies, indicating a good value for Downer EDI's revenue size. The same is valid for expected Price-to-Profits, more favorable than 91% of alternatives, and it is also true for the Price-to-Book capital (also referred to as market-to-book ratio) with an Obermatt Price-to-Capital Rank of 93. Compared with other companies in the same industry, dividend yields of Downer EDI are expected to be higher than 94% of all competitors (an Obermatt Dividend Yield rank of 94). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 100, is a strong buy recommendation based on Downer EDI's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Downer EDI based on its detailed value metrics.
Growth Strategy: Downer EDI Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 7 (better than 7% compared with alternatives), Downer EDI 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 all four metrics below average for Downer EDI. Sales Growth has a rank of 23, which means that currently professionals expect the company to grow less than 77% of its competitors. The same is valid for Profit Growth, with a rank of 14, and Capital Growth with 28. In addition, Stock Returns have a below market rank of 9, which means that the stock returns have recently been below 91% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 7, is a SELL recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's prospects, especially Sentiment performance, because it may be a turnaround situation that could entail above-average returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Downer EDI Debt Financing Safety risky
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 25 |
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| REFINANCING | ||||||||
| REFINANCING | 36 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 22 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 20 |
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ANALYSIS: With an Obermatt Safety Rank of 20 (better than 20% compared with alternatives), the company Downer EDI 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 Downer EDI 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 Downer EDI. Liquidity is at 22, meaning that the company generates less profit to service its debt than 78% 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 25, meaning the company has an above-average debt-to-equity ratio. It has more debt than 75% of its competitors. Finally, Refinancing is at a rank of 36 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 64% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 20 (worse than 80% compared with alternatives), Downer EDI 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. ...read more
Combined financial peformance: Downer EDI Lowest Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 7 |
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| SAFETY | ||||||||
| SAFETY | 22 |
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| COMBINED | ||||||||
| COMBINED | 22 |
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ANALYSIS: With an Obermatt Combined Rank of 22 (worse than 78% compared with investment alternatives), Downer EDI (Diversified Support Services, Australia) shares have lower financial characteristics compared with similar stocks. Shares of Downer EDI are a good value (attractively priced) with a consolidated Obermatt Value Rank of 100 (better than 100% of alternatives) but show below-average growth (Growth Rank of 7), and are riskily financed (Safety Rank of 20), which means above-average debt burdens. ...read more
RECOMMENDATION: An Obermatt Combined Rank of 22, is a sell recommendation based on Downer EDI's financial characteristics. As the company Downer EDI's key financial metrics exhibit good value (Obermatt Value Rank of 100) but low growth (Obermatt Growth Rank of 7) and risky financing practices (Obermatt Safety Rank of 20), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 100% of comparable companies, may indicate 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. ...read more
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