June 13, 2024
Top 10 Stock EDP 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: EDP – Top 10 Stock in PSI-20 Index
EDP is listed as a top 10 stock on June 13, 2024 in the market index PSI 20 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 EDP on June 13, 2024.
Snapshot: Obermatt Ranks
| Country | Portugal |
| Industry | Electric Utilities |
| Index | Low Emissions, Employee Focus EU, Human Rights, Nuclear, PSI General, PSI 20 |
| Size class | XX-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 EDP Sell
| 360 METRICS | June 13, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 52 |
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| GROWTH | ||||||||
| GROWTH | 21 |
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| SAFETY | ||||||||
| SAFETY | 23 |
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| SENTIMENT | ||||||||
| SENTIMENT | 46 |
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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 EDP are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for EDP. Only the consolidated Value Rank has an attractive rank of 52, which means that the share price of EDP 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 52% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 21, 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 23, meaning the company has a riskier financing structure than 77% 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 54% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 46. ...read more
RECOMMENDATION: With a consolidated 360° View of 18, EDP is worse than 82% of all alternative stock investment opportunities based on the Obermatt Method. This means that EDP 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 52. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 21), a riskier financing structure than the competition (Safety Rank of 23), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 46) 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 EDP 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 EDP. 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 EDP only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 46 (better than 46% compared with alternatives), overall professional sentiment and engagement for the stock EDP is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for EDP. Analyst Opinions are at a rank of 62 (better than 62% 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 63, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 63% 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 EDP. There are also only so many institutional investors holding company stock with a Professional Investors rank of 44, which means that, currently, professional investors hold less stock in this company than in 56% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 46 (less encouraging than 54% compared with investment alternatives), EDP has a reputation among professional investors that is below 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
Value Strategy: EDP Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 52 (better than 52% compared with alternatives), EDP shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for EDP. Price-to-Sales (P/S) is 56, which means that the stock price compared with what market professionals expect for future sales is lower than for 56% of comparable companies, indicating a good value concerning EDP's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 72, which means that dividends are expected to be higher than for 72% of comparable investments. On the other hand, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is less favorable than for 55% of alternatives (only 45% of peers have an even higher ratio). The same is valid for the Price-to-Profit (or Price / Earnings, P/E) ratio, which is higher than for 63% 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 52, is a buy recommendation based on EDP's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. ...read more
Growth Strategy: EDP Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 21 (better than 21% compared with alternatives), EDP 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 half of the indicators below and half above average for EDP. Sales Growth has a rank of 54, which means that, currently, professionals expect the company to grow more than 54% of its competitors. Profit Growth with a rank of 79 is also above average. But Capital Growth has only a rank of 23, and Stock Returns with 18 are also below-average. Stock returns for EDP have recently been below 82% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 21, is a sell recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for EDP. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. ...read more
Safety Strategy: EDP Debt Financing Safety risky
| SAFETY METRICS | June 13, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 46 |
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| REFINANCING | ||||||||
| REFINANCING | 29 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 35 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 23 |
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ANALYSIS: With an Obermatt Safety Rank of 23 (better than 23% compared with alternatives), the company EDP 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 EDP 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 EDP. Liquidity is at 35, meaning that the company generates less profit to service its debt than 65% 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 46, meaning the company has an above-average debt-to-equity ratio. It has more debt than 54% of its competitors. Finally, Refinancing is at a rank of 29 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 71% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 23 (worse than 77% compared with alternatives), EDP 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: EDP Lowest Financial Performance
| COMBINED PERFORMANCE | June 13, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 52 |
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| GROWTH | ||||||||
| GROWTH | 21 |
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| SAFETY | ||||||||
| SAFETY | 35 |
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| COMBINED | ||||||||
| COMBINED | 12 |
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ANALYSIS: With an Obermatt Combined Rank of 12 (worse than 88% compared with investment alternatives), EDP (Electric Utilities, Portugal) shares have lower financial characteristics compared with similar stocks. Shares of EDP are a good value (attractively priced) with a consolidated Value Rank of 52 (better than 52% of alternatives) but show below-average growth (Growth Rank of 21), and are riskily financed (Safety Rank of 23), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 12, is a sell recommendation based on EDP's financial characteristics. As the company EDP's key financial metrics exhibit good value (Obermatt Value Rank of 52) but low growth (Obermatt Growth Rank of 21) and risky financing practices (Obermatt Safety Rank of 23), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 52% 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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