March 14, 2024
Top 10 Stock Redrow Hold 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: Redrow – Top 10 Stock in Customer Satisfaction Leaders in Europe
Redrow is listed as a top 10 stock on March 14, 2024 in the market index Customer Focus EU because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the 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 49 (49% performer), Obermatt assesses an overall hold recommendation for Redrow on March 14, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Homebuilding |
| Index | FTSE All Shares, FTSE 250, FTSE 350, Customer Focus EU, Employee Focus EU, SDG 11, SDG 13, SDG 15, SDG 5, SDG 8 |
| 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 Redrow Hold
| 360 METRICS | March 14, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 30 |
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| GROWTH | ||||||||
| GROWTH | 34 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| SENTIMENT | ||||||||
| SENTIMENT | 50 |
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| 360° VIEW | ||||||||
| 360° VIEW | 49 |
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ANALYSIS: With an Obermatt 360° View of 49 (better than 49% compared with alternatives), overall professional sentiment and financial characteristics for the stock Redrow are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Redrow. The consolidated Sentiment Rank has a good rank of 50, which means that professional investors are more optimistic about the stock than for 50% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 100 or better than 100% 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 30, meaning that the share price of Redrow 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 34. ...read more
RECOMMENDATION: With a consolidated 360° View of 49, Redrow is worse than 51% 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 50) and safe financing practices (Safety Rank of 100), 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 Redroẉ 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
Sentiment Strategy: Professional Market Sentiment for Redrow positive
ANALYSIS: With an Obermatt Sentiment Rank of 50 (better than 50% compared with alternatives), overall professional sentiment and engagement for the stock Redrow is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and the other half above average for Redrow. Analyst Opinions are at a rank of 43 (worse than 57% 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 44, 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 44, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 56% of competitors). On the upside, the Professional Investors rank is 74, which means that professional investors hold more stock in this company than in 74% 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 50 (more positive than 50% compared with investment alternatives), Redrow has a reputation among professional investors that is above-average compared with that of its competitors. Should the company be on the smaller side, the presence of professional investors could be reassuring. That would make Redrow 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: Redrow Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 30 (worse than 70% compared with alternatives), Redrow shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators where three out of four are below average for Redrow. Only the Price-to-Book Capital ratio (also referred to as market-to-book ratio) indicates good stock value with a Price-to-Book Rank of 65, which means that the stock price is lower compared with invested capital than for 65% of comparable investments. All other value indicators are below the market median. Price-to-Sales is 33 which means the stock price compared with what market professionals expect for future profits is higher than 67% of comparable companies, indicating a low value concerning Redrow's revenue levels. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Book Rank of 65 and for the dividend yields rank which is lower than for 59% of comparable companies, making the stock more expensive as regards to with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 30, is a hold recommendation based on Redrow's stock price compared with the company's operational size and dividend yields. Why are market participants paying such a high price for Redrow, where three out of four value indicators are below par? One reason could be that the company is well financed, indicated by the high book capital level, and has a promising future that is not yet visible in reported revenues and profits. That would also explain the low dividend yield because the company needs the cash to invest in its future. If investors can verify a picture in this sense, the stock may still be a good investment, even though current company-reported financials don't fully explain current stock prices. ...read more
Growth Strategy: Redrow Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 34 (better than 34% compared with alternatives), Redrow 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 three out of four indicators below average for Redrow. Sales Growth has a below market rank of 42, which means that, currently, professionals expect the company to grow less than 58% of its competitors. The same is valid for Capital Growth, with a rank of 12, and Profit Growth, with a rank of 14. Currently, professionals expect the company to grow its profits less than 86% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 90, which means that the stock returns have recently been above 90% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 34, is a hold recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Redrow, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: Redrow Debt Financing Safety very solid
| SAFETY METRICS | March 14, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 97 |
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| REFINANCING | ||||||||
| REFINANCING | 78 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 95 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 100 |
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ANALYSIS: With an Obermatt Safety Rank of 100 (better than 100% compared with alternatives) for 2024, the company Redrow has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Redrow 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 all three are above average for Redrow. Leverage is at 97, meaning the company has a below-average debt-to-equity ratio. It has less debt than 97% of its competitors. Refinancing is at a rank of 78, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 78% of its competitors. Finally, Liquidity is also good at a rank of 95, which means that the company generates more profit to service its debt than 95% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 100 (better than 100% compared with alternatives), Redrow has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Redrow Above-Average Financial Performance
| COMBINED PERFORMANCE | March 14, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 30 |
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| GROWTH | ||||||||
| GROWTH | 34 |
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| SAFETY | ||||||||
| SAFETY | 95 |
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| COMBINED | ||||||||
| COMBINED | 61 |
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ANALYSIS: With an Obermatt Combined Rank of 61 (better than 61% compared with investment alternatives), Redrow (Homebuilding, United Kingdom) shares have above-average financial characteristics compared with similar stocks. Shares of Redrow are low in value (priced high) with a consolidated Value Rank of 30 (worse than 70% of alternatives) and show below-average growth (Growth Rank of 34) but are safely financed (Safety Rank of 100), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 61, is a buy recommendation based on Redrow's financial characteristics. As the company Redrow's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 30) and low growth (Obermatt Growth Rank of 34), 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 100) 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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