July 4, 2024
Top 10 Stock Severn Trent 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: Severn Trent – Top 10 Stock in FTSE All Share Index
Severn Trent 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. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 40 (40% performer), Obermatt assesses an overall hold recommendation for Severn Trent on July 04, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Water Utilities |
| Index | FTSE All Shares, FTSE 100, FTSE 350, Low Emissions, Employee Focus EU, Energy Efficient, Diversity Europe, Solar Tech |
| 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 Severn Trent Hold
| 360 METRICS | July 4, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 14 |
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| GROWTH | ||||||||
| GROWTH | 93 |
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| SAFETY | ||||||||
| SAFETY | 78 |
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| SENTIMENT | ||||||||
| SENTIMENT | 4 |
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| 360° VIEW | ||||||||
| 360° VIEW | 40 |
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ANALYSIS: With an Obermatt 360° View of 40 (better than 40% compared with alternatives), overall professional sentiment and financial characteristics for the stock Severn Trent are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Severn Trent. The consolidated Growth Rank has a good rank of 93, 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 93% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 78 which means that the company has a financing structure that is safer than 78% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 14 which means that the share price of Severn Trent is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 86% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 4, which means that professional investors are more pessimistic about the stock than for 96% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 40, Severn Trent is worse than 60% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 93), and the company is safely financed (Safety Rank of 78). However, professional market sentiment is low(Sentiment Rank of 4). The negative market view on Severn Trent 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 board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Severn Trent compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred 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 if the value rank is above 60. As market sentiment is low, 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 Severn Trent negative
ANALYSIS: With an Obermatt Sentiment Rank of 4 (better than 4% compared with alternatives), overall professional sentiment and engagement for the stock Severn Trent is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Severn Trent. Analyst Opinions are at a rank of 23 (worse than 77% 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 19 which means that stock research experts are getting even more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 17, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 83% of competitors). No wonder, the Professional Investors rank is only 12, which means that professional investors hold less stock in this company than in 88% of alternative investment opportunities. Pros tend to stay away from Severn Trent, which may be due to a small company size but just as likely because of its relatively low Sentiment Rank. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 4 (less encouraging than 96% compared with investment alternatives), Severn Trent has a reputation among professional investors that is far below that of its competitors. Investors should be careful with this stock right now. Further research is required if an investment is desired, because the facts found in the professional community are all negative. ...read more
Value Strategy: Severn Trent Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 14 (worse than 86% compared with alternatives), Severn Trent 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 Severn Trent. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 60% 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 23 which means that the stock price compared with what market professionals expect for future profits is higher than 77% of comparable companies, indicating a low value concerning Severn Trent's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 18 which means that the stock price compared with what market professionals expect for future profit levels is higher than 82% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 1 is also low. Compared with invested capital, the stock price is higher than for 99% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 14, is a sell recommendation based on Severn Trent's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Severn Trent? 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 Severn Trent only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Severn Trent Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 93 (better than 93% compared with alternatives) for 2024, Severn Trent shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Severn Trent. Sales Growth has a value of 83 which means that currently professionals expect the company to grow more than 83% of its competitors. Profit Growth with a value of 86 and Capital Growth with a rank of 86 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 44, which means that stock returns have recently been below 56% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 93, is a buy recommendation for growth and momentum investors. Severn Trent has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for Severn Trent, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. ...read more
Safety Strategy: Severn Trent Debt Financing Safety very solid
| SAFETY METRICS | July 4, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 1 |
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| REFINANCING | ||||||||
| REFINANCING | 75 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 100 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 78 |
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ANALYSIS: With an Obermatt Safety Rank of 78 (better than 78% compared with alternatives) for 2024, the company Severn Trent has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Severn Trent 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, with two out of three indicators above-average for Severn Trent. Refinancing is at 75, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 75% of its competitors. Liquidity is also good at 100, meaning the company generates more profit to service its debt than 100% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 1, which means the company has an above-average debt-to-equity ratio. It has more debt than 99% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 78 (better than 78% compared with alternatives), Severn Trent has a financing structure that is significantly safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Severn Trent could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Severn Trent Top Financial Performance
| COMBINED PERFORMANCE | July 4, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 14 |
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| GROWTH | ||||||||
| GROWTH | 93 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| COMBINED | ||||||||
| COMBINED | 80 |
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ANALYSIS: With an Obermatt Combined Rank of 80 (better than 80% compared with investment alternatives), Severn Trent (Water Utilities, United Kingdom) shares have much better financial characteristics than comparable stocks. Shares of Severn Trent are low in value (priced high) with a consolidated Value Rank of 14 (worse than 86% of alternatives). But they show above-average growth (Growth Rank of 93) and are safely financed (Safety Rank of 78, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 80, is a strong buy recommendation based on Severn Trent's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Severn Trent exhibits low value (Obermatt Value Rank of 14), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 93). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 78) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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