February 22, 2024
Top 10 Stock DSM Strong Buy Recommendation

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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 DSM Strong Buy

360 METRICS	February 22, 2024
VALUE
VALUE	40
GROWTH
GROWTH	35
SAFETY
SAFETY	91
SENTIMENT
SENTIMENT	63
360° VIEW
360° VIEW	95

ANALYSIS: With an Obermatt 360° View of 95 (better than 95% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock DSM are very positive. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for DSM. The consolidated Sentiment Rank has a good rank of 63, which means that professional investors are more optimistic about the stock than for 63% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 91 or better than 91% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 40, meaning that the share price of DSM is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 35. ...read more

RECOMMENDATION: With a consolidated 360° View of 95, DSM is better positioned than 95% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 63) and safe financing practices (Safety Rank of 91), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of DSṂ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more

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Sentiment Strategy: Professional Market Sentiment for DSM positive

SENTIMENT METRICS	February 22, 2024
ANALYST OPINION
ANALYST OPINION	67
OPINIONS CHANGE
OPINIONS CHANGE	39
PRO HOLDINGS
PRO HOLDINGS	39
MARKET PULSE
MARKET PULSE	72
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	63

ANALYSIS: With an Obermatt Sentiment Rank of 63 (better than 63% compared with alternatives), overall professional sentiment and engagement for the stock DSM is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for DSM. Analyst Opinions are at a rank of 67 (better than 67% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 72, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 72% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 39, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in DSM. There are also only so many institutional investors holding company stock with a Professional Investors rank of 39, which means that, currently, professional investors hold less stock in this company than in 61% of alternative investment opportunities. Pros tend to invest in other companies. ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 63 (more positive than 63% compared with investment alternatives), DSM has a reputation among professional investors that is above-average compared with that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more

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Value Strategy: DSM Stock Price Value below-average critical

VALUE METRICS	February 22, 2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	97
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	16
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	35
DIVIDEND YIELD
DIVIDEND YIELD	31
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	40

ANALYSIS: With an Obermatt Value Rank of 40 (worse than 60% compared with alternatives), DSM shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where the majority of metrics are below, and only one is above average for DSM. Price-to-Sales (P/S) is 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 concerning to DSM's revenue size. But all other performance indicators point in a different direction. Dividend yields have a Dividend Yield rank of 31, meaning that dividends are expected to be lower than for 69% of comparable investments. Furthermore, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 65% of alternatives (only 35% of peers have an even higher ratio). The same is valid for Price-to-Profit (or Price / Earnings, P/E), which is higher than for 84% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 40, is a hold recommendation based on DSM's stock price compared with the company's operational size and dividend yields. Since Price-to-Sales is a stable value indicator even in challenging times, investing in DSM could be seen as a value investment. However, there must be a good reason for the low market-to-book rank. If the company has a typical capital investment practice, the stock may be overvalued because the profit and dividend-related performance indicators are also low. The stock is only good value if investors can expect profits and dividends to pick up in the future. Else, DSM looks like an expensive investment today. ...read more

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Growth Strategy: DSM Growth Momentum low

GROWTH METRICS	February 22, 2024
REVENUE GROWTH
REVENUE GROWTH	49
PROFIT GROWTH
PROFIT GROWTH	50
CAPITAL GROWTH
CAPITAL GROWTH	13
STOCK RETURNS
STOCK RETURNS	63
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	35

ANALYSIS: With an Obermatt Growth Rank of 35 (better than 35% compared with alternatives), DSM 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 DSM. Profit Growth has a rank of 50, which means that currently professionals expect the company to grow its profits more than 50% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 63 (above 63% of alternative investments). But Sales Growth has a below the median rank of 49, which means that, currently, professionals expect the company to grow less than 51% of its competitors, and Capital Growth also has a lower rank of 13. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 35, is a hold 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 DSM. ...read more

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Safety Strategy: DSM Debt Financing Safety very solid

SAFETY METRICS	February 22, 2024
LEVERAGE
LEVERAGE	73
REFINANCING
REFINANCING	100
LIQUIDITY
LIQUIDITY	42
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	91

ANALYSIS: With an Obermatt Safety Rank of 91 (better than 91% compared with alternatives) for 2024, the company DSM has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of DSM 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 two out of three are above average for DSM.Leverage is at 73, meaning the company has a below-average debt-to-equity ratio. It has less debt than 73% of its competitors.Refinancing is at a rank of 100, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 100% of its competitors. Liquidity is at 42, meaning that the company generates less profit to service its debt than 58% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 91 (better than 91% compared with alternatives), DSM has a financing structure that is significantly safer than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. ...read more

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Combined financial peformance: DSM Above-Average Financial Performance

COMBINED PERFORMANCE	February 22, 2024
VALUE
VALUE	40
GROWTH
GROWTH	35
SAFETY
SAFETY	42
COMBINED
COMBINED	61

ANALYSIS: With an Obermatt Combined Rank of 61 (better than 61% compared with investment alternatives), DSM (Specialty Chemicals, Netherlands) shares have above-average financial characteristics compared with similar stocks. Shares of DSM are low in value (priced high) with a consolidated Value Rank of 40 (worse than 60% of alternatives) and show below-average growth (Growth Rank of 35) but are safely financed (Safety Rank of 91), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 61, is a buy recommendation based on DSM's financial characteristics. As the company DSM's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 40) and low growth (Obermatt Growth Rank of 35), 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. In this case, good financing practices (Obermatt Safety Rank of 91) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more

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