July 4, 2024
Top 10 Stock Melrose Strong 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: Melrose – Top 10 Stock in FTSE All Share Index
Melrose is listed as a top 10 stock on July 04, 2024 in the market index FTSE All Shares because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 82 (top 82% performer), Obermatt assesses an overall strong buy recommendation for Melrose on July 04, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Industrial Conglomerates |
| Index | FTSE All Shares, FTSE 100, FTSE 350, Dividends Europe, Electromobility |
| 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 Melrose Strong Buy
| 360 METRICS | July 4, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 46 |
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| GROWTH | ||||||||
| GROWTH | 67 |
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| SAFETY | ||||||||
| SAFETY | 28 |
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| SENTIMENT | ||||||||
| SENTIMENT | 100 |
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| 360° VIEW | ||||||||
| 360° VIEW | 82 |
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ANALYSIS: With an Obermatt 360° View of 82 (better than 82% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Melrose are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Melrose. The consolidated Growth Rank has a good rank of 67, 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. This means that growth is higher than for 67% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 100, which means that professional investors are more optimistic about the stock than for 100% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 46, which means that the share price of Melrose is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 54% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 28, which means that the company has a financing structure that is riskier than those of 72% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 82, Melrose is better positioned than 82% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 67), and professional market sentiment is positive (Sentiment Rank of 100), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value 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 if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Melrose very positive
ANALYSIS: With an Obermatt Sentiment Rank of 100 (better than 100% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Melrose is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Melrose. Analyst Opinions are at a rank of 79 (better than 79% 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 84, 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 Melrose. The Professional Investors rank is 75, which means that currently, professional investors hold more stock in this company than in 75% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 89 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 89% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 100 (more positive than 100% compared with investment alternatives), Melrose 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 Melrose 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: Melrose Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 46 (worse than 54% compared with alternatives), Melrose shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Melrose. Expected dividend yields are higher than for 55% of comparable companies (a Dividend Yield rank of 55), making the stock attractive. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 51, which means that the stock price is lower compared with invested capital than for 51% of comparable investments. But in respect to sales and profits, the picture is reversed. Price-to-Sales is 27 which means that the stock price compared with what market professionals expect for future profits is higher than for 73% of comparable companies, indicating a low value concerning Melrose's sales levels. The Price-to-Profit ratio (also referred to as price-earnings (P/E) ratio) is also unfavorable for Melrose with a rank of 40. This means that the stock price, compared with what market professionals expect for future profits, is higher than for 60% of comparable companies, indicating a low value concerning Melrose's profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 46, is a hold recommendation based on Melrose's stock price compared with the company's operational size and dividend yields. The company seems confident that it can generate a reasonable return on invested capital, because it pays an above-average dividend while profits are below what you would expect for a company with this stock price. If you agree with this practice and believe that profits will return to higher levels, as the current dividend policy suggests, Melrose may be an attractive investment. If this is not the case, you may want to be careful with this stock as it is also expensive compared with its expected revenue levels. ...read more
Growth Strategy: Melrose Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 67 (better than 67% compared with alternatives), Melrose 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 all four indicators above average for Melrose. Sales Growth has a value of 63, which means that, currently, professionals expect the company to grow more than 63% of its competitors. The same is valid for Profit Growth with a value of 72 and for Capital Growth with 72. In addition, Stock Returns had an above-average rank value of 56, which means they have been higher than 56% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 67, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Melrose exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Melrose Debt Financing Safety below-average
| SAFETY METRICS | July 4, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 85 |
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| REFINANCING | ||||||||
| REFINANCING | 16 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 16 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 28 |
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ANALYSIS: With an Obermatt Safety Rank of 28 (better than 28% compared with alternatives), the company Melrose 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 Melrose 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 Melrose and the other two below average. Leverage is at a rank of 85 meaning the company has a below-average debt-to-equity ratio. It has less debt than 85% of its competitors.Refinancing is at a rank of 16, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 84% of its competitors. Liquidity is at a rank of 16, meaning that the company generates less profit to service its debt than 84% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 28 (worse than 72% compared with alternatives), Melrose has a financing structure that is riskier than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of Melrose are on the safer side. ...read more
Combined financial peformance: Melrose Above-Average Financial Performance
| COMBINED PERFORMANCE | July 4, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 46 |
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| GROWTH | ||||||||
| GROWTH | 67 |
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| SAFETY | ||||||||
| SAFETY | 16 |
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| COMBINED | ||||||||
| COMBINED | 54 |
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ANALYSIS: With an Obermatt Combined Rank of 54 (better than 54% compared with investment alternatives), Melrose (Industrial Conglomerates, United Kingdom) shares have above-average financial characteristics compared with similar stocks. Shares of Melrose are low in value (priced high) with a consolidated Value Rank of 46 (worse than 54% of alternatives), and are riskily financed (Safety Rank of 28, which means above-average debt burdens) but show above-average growth (Growth Rank of 67). ...read more
RECOMMENDATION: A Combined Rank of 54, is a buy recommendation based on Melrose's financial characteristics. As the company Melrose shows low value with an Obermatt Value Rank of 46 (54% 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 67% of comparable companies (Obermatt Growth Rank is 67). 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 28 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 Melrose, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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