August 1, 2024
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 August 01, 2024 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, conveying mixed investment signals. Based on the Obermatt 360° View of 18 (18% performer), Obermatt issues an overall sell recommendation for Downer EDI on August 01, 2024.
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° View Downer EDI Sell
| 360 METRICS | August 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 96 |
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| GROWTH | ||||||||
| GROWTH | 23 |
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| SAFETY | ||||||||
| SAFETY | 17 |
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| SENTIMENT | ||||||||
| SENTIMENT | 17 |
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| 360° VIEW | ||||||||
| 360° VIEW | 18 |
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ANALYSIS: With an Obermatt 360° View of 18 (better than 18% compared with alternatives), overall professional sentiment and financial characteristics for the stock Downer EDI are critical, mostly below average. The 360° View 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 96, which means that the share price of Downer EDI is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 96% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 23, 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 17, meaning the company has a riskier financing structure than 83% 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 83% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 17. ...read more
RECOMMENDATION: With a consolidated 360° View of 18, Downer EDI is worse than 82% 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 96. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 23), a riskier financing structure than the competition (Safety Rank of 17), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 17) is negative. 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 low 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 17 (better than 17% 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 the indicators below and the other half above average for Downer EDI. Analyst Opinions are at a rank of 21 (worse than 79% 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 41, which means that stock research experts are getting more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 23, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 77% of competitors). On the upside, the Professional Investors rank is 59, which means that professional investors hold more stock in this company than in 59% of alternative investment opportunities. Pros tend to favor investing in this company. This could be due to a large company size, which could contribute to the higher share of professional investors in the company. If this is not the case, the low sentiment ranks are more challenging to explain. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 17 (less encouraging than 83% compared with investment alternatives), Downer EDI has a reputation among professional investors that is far below that of its competitors. Should the company be on the smaller side, the presence of professional investors could be reassuring. That would make Downer EDI stock something like a hidden gem. Investors should make sure with further research that this is true, because all other sentiment indicators are negative which is a sign for caution. ...read more
Value Strategy: Downer EDI Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 96 (better than 96% compared with alternatives) for 2024, 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 is 97 which means that the stock price compared with what market professionals expect for future sales is lower than for 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 for 74% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 78. Compared with other companies in the same industry, dividend yields of Downer EDI are expected to be higher than for 77% of all competitors (a Dividend Yield rank of 77). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 96, is a 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 23 (better than 23% 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 three out of four indicators below average for Downer EDI. Sales Growth has a below market rank of 11, which means that, currently, professionals expect the company to grow less than 89% of its competitors. The same is valid for Capital Growth, with a rank of 25, and Profit Growth, with a rank of 46. Currently, professionals expect the company to grow its profits less than 54% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 67, which means that the stock returns have recently been above 67% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 23, is a sell recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Downer EDI, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: Downer EDI Debt Financing Safety risky
| SAFETY METRICS | August 1, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 18 |
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| REFINANCING | ||||||||
| REFINANCING | 32 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 23 |
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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 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 23, meaning that the company generates less profit to service its debt than 77% 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 18, meaning the company has an above-average debt-to-equity ratio. It has more debt than 82% of its competitors. Finally, Refinancing is at a rank of 32 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 68% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 17 (worse than 83% 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.
Combined financial peformance: Downer EDI Below-Average Financial Performance
| COMBINED PERFORMANCE | August 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 96 |
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| GROWTH | ||||||||
| GROWTH | 23 |
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| SAFETY | ||||||||
| SAFETY | 23 |
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| COMBINED | ||||||||
| COMBINED | 38 |
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ANALYSIS: With an Obermatt Combined Rank of 38 (worse than 62% compared with investment alternatives), Downer EDI (Diversified Support Services, Australia) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Downer EDI are a good value (attractively priced) with a consolidated Value Rank of 96 (better than 96% of alternatives) but show below-average growth (Growth Rank of 23), and are riskily financed (Safety Rank of 17), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 38, is a hold recommendation based on Downer EDI's financial characteristics. As the company Downer EDI's key financial metrics exhibit good value (Obermatt Value Rank of 96) but low growth (Obermatt Growth Rank of 23) and risky financing practices (Obermatt Safety Rank of 17), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 96% 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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