May 2, 2024
Top 10 Stock Dunelm 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: Dunelm – Top 10 Stock in FTSE 250 Index
Dunelm 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. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 10 (10% performer), Obermatt issues an overall sell recommendation for Dunelm on May 02, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Homefurnishing Retail |
| Index | FTSE All Shares, FTSE 250, FTSE 350, Diversity Europe |
| Size class | 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 Dunelm Sell
| 360 METRICS | May 2, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 22 |
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| GROWTH | ||||||||
| GROWTH | 54 |
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| SAFETY | ||||||||
| SAFETY | 38 |
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| SENTIMENT | ||||||||
| SENTIMENT | 24 |
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| 360° VIEW | ||||||||
| 360° VIEW | 10 |
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ANALYSIS: With an Obermatt 360° View of 10 (better than 10% compared with alternatives), overall professional sentiment and financial characteristics for the stock Dunelm are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Dunelm. The consolidated Growth Rank has a good rank of 54, 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. It ranks higher than 54% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 22 means that the share price of Dunelm is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 78% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 38, which means that the company has a riskier financing structure than 62% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 24, indicating professional investors are more pessimistic about the stock than for 76% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 10, Dunelm is worse than 90% of all alternative stock investment opportunities based on the Obermatt Method. This means that Dunelm shares are on the riskier side for investors. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 54), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 24), the company is rather risky when it comes to financing (Safety Rank of 38). The negative market view on Dunelm may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of Dunelm compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Dunelm negative
ANALYSIS: With an Obermatt Sentiment Rank of 24 (better than 24% compared with alternatives), overall professional sentiment and engagement for the stock Dunelm 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 Dunelm. Analyst Opinions are at a rank of 26 (worse than 74% 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 10, 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 49, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 51% of competitors). On the upside, the Professional Investors rank is 54, which means that professional investors hold more stock in this company than in 54% 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 24 (less encouraging than 76% compared with investment alternatives), Dunelm 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 Dunelm 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: Dunelm Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 22 (worse than 78% compared with alternatives), Dunelm shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Dunelm. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 94% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 13 which means that the stock price compared with what market professionals expect for future profits is higher than 87% of comparable companies, indicating a low value concerning Dunelm's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 23 which means that the stock price compared with what market professionals expect for future profit levels is higher than 77% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 3 is also low. Compared with invested capital, the stock price is higher than for 97% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 22, is a sell recommendation based on Dunelm's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Dunelm? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Dunelm only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Dunelm Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 54 (better than 54% compared with alternatives), Dunelm 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 Dunelm. Capital Growth has a rank of 81, which means that currently professionals expect the company to grow its invested capital more than 29% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 52 (above 52% of alternative investments). But Sales Growth has only a rank of 48, which means that, currently, professionals expect the company to grow less than 52% of its competitors, and Profit Growth is also low at a rank of 29. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 54, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Dunelm, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Dunelm Debt Financing Safety below-average
| SAFETY METRICS | May 2, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 19 |
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| REFINANCING | ||||||||
| REFINANCING | 30 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 96 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 38 |
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ANALYSIS: With an Obermatt Safety Rank of 38 (better than 38% compared with alternatives), the company Dunelm has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Dunelm 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 just one indicator above average for Dunelm. Liquidity is at 96, meaning the company generates more profit to service its debt than 96% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 30, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 70% of its competitors. Leverage is also high at a rank of 19, which means that the company has an above-average debt-to-equity ratio. It has more debt than 81% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 38 (worse than 62% compared with alternatives), Dunelm has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Dunelm Lowest Financial Performance
| COMBINED PERFORMANCE | May 2, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 22 |
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| GROWTH | ||||||||
| GROWTH | 54 |
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| SAFETY | ||||||||
| SAFETY | 96 |
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| COMBINED | ||||||||
| COMBINED | 15 |
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ANALYSIS: With an Obermatt Combined Rank of 15 (worse than 85% compared with investment alternatives), Dunelm (Homefurnishing Retail, United Kingdom) shares have lower financial characteristics compared with similar stocks. Shares of Dunelm are low in value (priced high) with a consolidated Value Rank of 22 (worse than 78% of alternatives), and are riskily financed (Safety Rank of 38, which means above-average debt burdens) but show above-average growth (Growth Rank of 54). ...read more
RECOMMENDATION: A Combined Rank of 15, is a sell recommendation based on Dunelm's financial characteristics. As the company Dunelm shows low value with an Obermatt Value Rank of 22 (78% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 54% of comparable companies (Obermatt Growth Rank is 54). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 38 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Dunelm, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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