June 22, 2023
Top 10 Stock DS Smith Buy 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: DS Smith – Top 10 Stock in FTSE 100 Index
DS Smith is listed as a top 10 stock on June 22, 2023 in the market index FTSE 100 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low. Based on the Obermatt 360° View of 55 (high 55% performer), Obermatt assesses an overall buy recommendation for DS Smith on June 22, 2023.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Paper Packaging |
| Index | FTSE All Shares, FTSE 100, FTSE 350, Low Emissions, Dividends Europe, Human Rights, Renewables Users |
| 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 DS Smith Buy
| 360 METRICS | June 22, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 79 |
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| GROWTH | ||||||||
| GROWTH | 51 |
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| SAFETY | ||||||||
| SAFETY | 3 |
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| SENTIMENT | ||||||||
| SENTIMENT | 87 |
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| 360° VIEW | ||||||||
| 360° VIEW | 55 |
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ANALYSIS: With an Obermatt 360° View of 55 (better than 55% compared with alternatives), overall professional sentiment and financial characteristics for the stock DS Smith are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for DS Smith. The consolidated Value Rank has an attractive rank of 79, which means that the share price of DS Smith 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 79% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 51, 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. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 87. But the company’s financing is risky with a Safety rank of 3. This means 97% of comparable companies have a safer financing structure than DS Smith. ...read more
RECOMMENDATION: With a 360° View of 55, DS Smith is better positioned than 55% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 79), above-average growth (Growth Rank of 51), and positive market sentiment in the professional investor community (Sentiment Rank of 87), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 3), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of DS Smith is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for DS Smith very positive
ANALYSIS: With an Obermatt Sentiment Rank of 87 (better than 87% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock DS Smith is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for DS Smith. Analyst Opinions are at a rank of 69 (better than 69% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 68, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in DS Smith. The Professional Investors rank is 100, which means that currently, professional investors hold more stock in this company than in 100% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 55 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 55% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 87 (more positive than 87% compared with investment alternatives), DS Smith has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean DS Smith stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: DS Smith Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 79 (better than 79% compared with alternatives) for 2023, DS Smith shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for DS Smith. Price-to-Sales is 55 which means that the stock price compared with what market professionals expect for future sales is lower than for 55% of comparable companies, indicating a good value for DS Smith's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 69% 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 66. Compared with other companies in the same industry, dividend yields of DS Smith are expected to be higher than for 90% of all competitors (a Dividend Yield rank of 90). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 79, is a strong buy recommendation based on DS Smith'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 DS Smith based on its detailed value metrics.
Growth Strategy: DS Smith Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 51 (better than 51% compared with alternatives), DS Smith shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for DS Smith. Profit Growth has a rank of 94, which means that currently professionals expect the company to grow its profits more than 94% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 73 (above 73% of alternative investments). But Sales Growth has a below the median rank of 6, which means that, currently, professionals expect the company to grow less than 94% of its competitors, and Capital Growth also has a lower rank of 23. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 51, is a BUY recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for DS Smith. ...read more
Safety Strategy: DS Smith Debt Financing Safety risky
| SAFETY METRICS | June 22, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 44 |
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| REFINANCING | ||||||||
| REFINANCING | 1 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 24 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 3 |
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ANALYSIS: With an Obermatt Safety Rank of 3 (better than 3% compared with alternatives), the company DS Smith 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 DS Smith 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 DS Smith. Liquidity is at 24, meaning that the company generates less profit to service its debt than 76% 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 44, meaning the company has an above-average debt-to-equity ratio. It has more debt than 56% of its competitors. Finally, Refinancing is at a rank of 1 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 99% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 3 (worse than 97% compared with alternatives), DS Smith 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: DS Smith Below-Average Financial Performance
| COMBINED PERFORMANCE | June 22, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 79 |
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| GROWTH | ||||||||
| GROWTH | 51 |
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| SAFETY | ||||||||
| SAFETY | 24 |
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| COMBINED | ||||||||
| COMBINED | 29 |
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ANALYSIS: With an Obermatt Combined Rank of 29 (worse than 71% compared with investment alternatives), DS Smith (Paper Packaging, United Kingdom) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of DS Smith are a good value (attractively priced) with a consolidated Obermatt Value Rank of 79 (better than 79% of alternatives), show above-average growth (Growth Rank of 51) but are riskily financed (Safety Rank of 3), which means above-average debt burdens. ...read more
RECOMMENDATION: An Obermatt Combined Rank of 29, is a hold recommendation based on DS Smith's financial characteristics. As the company DS Smith's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 79) and above-average growth (Obermatt Growth Rank of 51), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 3) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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