May 2, 2024
Top 10 Stock Drax 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: Drax – Top 10 Stock in FTSE 250 Index
Drax is listed as a top 10 stock on May 02, 2024 in the market index FTSE 250 because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° View of 40 (40% performer), Obermatt assesses an overall hold recommendation for Drax on May 02, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Power Producers & Traders |
| Index | FTSE All Shares, FTSE 250, FTSE 350, Low Emissions, Employee Focus EU |
| 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 Drax Hold
| 360 METRICS | May 2, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 96 |
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| GROWTH | ||||||||
| GROWTH | 1 |
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| SAFETY | ||||||||
| SAFETY | 83 |
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| SENTIMENT | ||||||||
| SENTIMENT | 12 |
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| 360° VIEW | ||||||||
| 360° VIEW | 40 |
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ANALYSIS: With an Obermatt 360° View of 40 (better than 40% compared with alternatives), overall professional sentiment and financial characteristics for the stock Drax are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Drax. The consolidated Value Rank has an attractive rank of 96, which means that the share price of Drax is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 96% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 83. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 12. Professional investors are more confident in 88% other stocks. The consolidated Growth Rank also has a low rank of 1, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 99 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 40, Drax is worse than 60% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 96), and the financing structure is on the safer side (Safety Rank of 83). However, sentiment in the professional investor community is below-average (Sentiment Rank of 12), as is the growth momentum for the company (Growth Rank of 1). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for Drax negative
ANALYSIS: With an Obermatt Sentiment Rank of 12 (better than 12% compared with alternatives), overall professional sentiment and engagement for the stock Drax is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Drax. Analyst Opinions are at a rank of 59 (better than 59% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. This is a good sign, were it not for Analyst Opinions Change with a low rank of 39, which means that currently, stock research experts are changing their opinions for the worse. In other words, they are getting more critical of a stock investment in Drax. The Professional Investors rank is also low at 30, meaning that professional investors hold less stock in this company than in 70% of alternative investment opportunities. Pros tend to invest in other companies. Even worse, Market Pulse has a low rank of 3, which means that the current professional news and professional social networks are critical of this company (more negative news than for 97% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 12 (less encouraging than 88% compared with investment alternatives), Drax has a reputation among professional investors that is far below that of its competitors. There are several negative sentiment signals, with only the Analyst Opinions Rank above average. This could be a stock with a long reputation for being positive but where things are worsening. Most analysts may not see it yet, but some have, and the professionals are already quite pessimistic. Proceed with caution when investing in this stock. ...read more
Value Strategy: Drax Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 96 (better than 96% compared with alternatives) for 2024, Drax shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Drax. Price-to-Sales is 91 which means that the stock price compared with what market professionals expect for future sales is lower than for 91% of comparable companies, indicating a good value for Drax's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 95% 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 82. Compared with other companies in the same industry, dividend yields of Drax are expected to be higher than for 58% of all competitors (a Dividend Yield rank of 58). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 96, is a buy recommendation based on Drax'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 Drax based on its detailed value metrics.
Growth Strategy: Drax Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 1 (better than 1% compared with alternatives), Drax 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 Drax. Sales Growth has a rank of 13, which means that currently professionals expect the company to grow less than 87% of its competitors. The same is valid for Profit Growth, with a rank of 48, and Capital Growth with 4. In addition, Stock Returns have a below market rank of 32, which means that the stock returns have recently been below 68% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 1, 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 outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Drax Debt Financing Safety very solid
| SAFETY METRICS | May 2, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 67 |
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| REFINANCING | ||||||||
| REFINANCING | 66 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 76 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 83 |
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ANALYSIS: With an Obermatt Safety Rank of 83 (better than 83% compared with alternatives) for 2024, the company Drax has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Drax 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 Drax. Leverage is at 67, meaning the company has a below-average debt-to-equity ratio. It has less debt than 67% of its competitors. Refinancing is at a rank of 66, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 66% of its competitors. Finally, Liquidity is also good at a rank of 76, which means that the company generates more profit to service its debt than 76% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 83 (better than 83% compared with alternatives), Drax 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: Drax Above-Average Financial Performance
| COMBINED PERFORMANCE | May 2, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 96 |
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| GROWTH | ||||||||
| GROWTH | 1 |
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| SAFETY | ||||||||
| SAFETY | 76 |
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| COMBINED | ||||||||
| COMBINED | 71 |
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ANALYSIS: With an Obermatt Combined Rank of 71 (better than 71% compared with investment alternatives), Drax (Power Producers & Traders, United Kingdom) shares have above-average financial characteristics compared with similar stocks. Shares of Drax are a good value (attractively priced) with a consolidated Value Rank of 96 (better than 96% of alternatives), are safely financed (Safety Rank of 83, which means low debt burdens), but show below-average growth (Growth Rank of 1). ...read more
RECOMMENDATION: A Combined Rank of 71, is a buy recommendation based on Drax's financial characteristics. As the company Drax's key financial metrics exhibit good value (Obermatt Value Rank of 96) but low growth (Obermatt Growth Rank of 1) while being safely financed (Obermatt Safety Rank of 83), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 96% 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
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