February 1, 2024
Top 10 Stock BAE Systems 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: BAE Systems – Top 10 Stock in FTSE 100 Index
BAE Systems is listed as a top 10 stock on February 01, 2024 in the market index FTSE 100 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 39 (39% performer), Obermatt assesses an overall hold recommendation for BAE Systems on February 01, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Aerospace & Defense |
| Index | FTSE All Shares, FTSE 100, FTSE 350, Diversity Europe |
| 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 BAE Systems Hold
| 360 METRICS | February 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 17 |
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| GROWTH | ||||||||
| GROWTH | 71 |
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| SAFETY | ||||||||
| SAFETY | 17 |
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| SENTIMENT | ||||||||
| SENTIMENT | 89 |
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| 360° VIEW | ||||||||
| 360° VIEW | 39 |
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ANALYSIS: With an Obermatt 360° View of 39 (better than 39% compared with alternatives), overall professional sentiment and financial characteristics for the stock BAE Systems 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 BAE Systems. The consolidated Growth Rank has a good rank of 71, 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 71% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 89, which means that professional investors are more optimistic about the stock than for 89% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 17, which means that the share price of BAE Systems 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 83% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 17, which means that the company has a financing structure that is riskier than those of 83% 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 39, BAE Systems is worse than 61% 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 71), and professional market sentiment is positive (Sentiment Rank of 89), 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 BAE Systems very positive
ANALYSIS: With an Obermatt Sentiment Rank of 89 (better than 89% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock BAE Systems is very positive. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for BAE Systems. Analyst Opinions are at a rank of 56 (better than 56% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 83, which means that currently, professional investors hold more stock in this company than in 83% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 96 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 96% of competitors). But Analyst Opinions Change has a below-average rank of 46, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in BAE Systems. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 89 (more positive than 89% compared with investment alternatives), BAE Systems has a reputation among professional investors that is significantly higher than that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...read more
Value Strategy: BAE Systems Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 17 (worse than 83% compared with alternatives), BAE Systems 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 BAE Systems. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 59% 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 21 which means that the stock price compared with what market professionals expect for future profits is higher than 79% of comparable companies, indicating a low value concerning BAE Systems's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 27 which means that the stock price compared with what market professionals expect for future profit levels is higher than 73% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 21 is also low. Compared with invested capital, the stock price is higher than for 79% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 17, is a sell recommendation based on BAE Systems's stock price compared with the company's operational size and dividend yields. Should dividend investors pick BAE Systems? 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 BAE Systems only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: BAE Systems Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 71 (better than 71% compared with alternatives), BAE Systems 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 BAE Systems. Sales Growth has a rank of 76 which means that currently professionals expect the company to grow more than 76% of its competitors. Stock Returns are also above average with a rank of 81. But Capital Growth has only a rank of 48, which means that currently professionals expect the company to grow its invested capital less than 52% of its competitors. Profit Growth is also low, with a rank of only 42, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 71, is a buy recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 81% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more
Safety Strategy: BAE Systems Debt Financing Safety risky
| SAFETY METRICS | February 1, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 55 |
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| REFINANCING | ||||||||
| REFINANCING | 19 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 36 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 17 |
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ANALYSIS: With an Obermatt Safety Rank of 17 (better than 17% compared with alternatives), the company BAE Systems 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 BAE Systems 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 BAE Systems and the other two below average. Leverage is at a rank of 55 meaning the company has a below-average debt-to-equity ratio. It has less debt than 55% of its competitors.Refinancing is at a rank of 19, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 81% of its competitors. Liquidity is at a rank of 36, meaning that the company generates less profit to service its debt than 64% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 17 (worse than 83% compared with alternatives), BAE Systems has a financing structure that is significantly 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 BAE Systems are on the safer side. ...read more
Combined financial peformance: BAE Systems Lowest Financial Performance
| COMBINED PERFORMANCE | February 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 17 |
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| GROWTH | ||||||||
| GROWTH | 71 |
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| SAFETY | ||||||||
| SAFETY | 36 |
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| COMBINED | ||||||||
| COMBINED | 7 |
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ANALYSIS: With an Obermatt Combined Rank of 7 (worse than 93% compared with investment alternatives), BAE Systems (Aerospace & Defense, United Kingdom) shares have lower financial characteristics compared with similar stocks. Shares of BAE Systems are low in value (priced high) with a consolidated Value Rank of 17 (worse than 83% of alternatives), and are riskily financed (Safety Rank of 17, which means above-average debt burdens) but show above-average growth (Growth Rank of 71). ...read more
RECOMMENDATION: A Combined Rank of 7, is a sell recommendation based on BAE Systems's financial characteristics. As the company BAE Systems shows low value with an Obermatt Value Rank of 17 (83% 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 71% of comparable companies (Obermatt Growth Rank is 71). 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 17 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 BAE Systems, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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