January 25, 2024
Top 10 Stock Centrica 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: Centrica – Top 10 Stock in Nuclear Energy
Centrica is listed as a top 10 stock on January 25, 2024 in the market index Nuclear because of its high performance in at least one of the Obermatt investment strategies. As all consolidated Obermatt Ranks exhibit excellent performance, including positive market sentiment in the professional investor community, it is a solid stock investment where the risk of paying too much for the shares is limited. Based on the Obermatt 360° View of 76 (top 76% performer), Obermatt assesses an overall strong buy recommendation for Centrica on January 25, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Multi-Utilities |
| Index | FTSE All Shares, FTSE 250, FTSE 350, Diversity Europe, Nuclear, Sound Pay 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 Centrica Strong Buy
| 360 METRICS | January 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 60 |
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| GROWTH | ||||||||
| GROWTH | 53 |
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| SAFETY | ||||||||
| SAFETY | 79 |
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| SENTIMENT | ||||||||
| SENTIMENT | 62 |
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| 360° VIEW | ||||||||
| 360° VIEW | 76 |
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ANALYSIS: With an Obermatt 360° View of 76 (better than 76% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Centrica are very positive. The 360° View is based on consolidating four consolidated indicators, with all four indicators above average for Centrica. The consolidated Value Rank has an attractive rank of 60, which means that the share price of Centrica is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 60% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 53, 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. The company is also safely financed with a Safety rank of 79. Finally, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 62. ...read more
RECOMMENDATION: With a consolidated 360° View of 76, Centrica is better positioned than 76% of all alternative stock investment opportunities based on the Obermatt Method. As all consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 60), above-average growth (Growth Rank of 53), safe financing practices (Safety Rank of 79), and a positive market sentiment in the professional investor community (Sentiment Rank of 62), it is a solid stock investment where the risk of paying too much for the shares is limited and disappointments are less likely to occur, unless information not publicly available. High-Value Ranks sometimes indicate that the company's future is challenging. If they are safely financed and have above average growth, and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of Centrica is as difficult as the stock’s low price, despite what good growth and safe financing practice suggest. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible, which may indicate good timing right now. ...read more
Sentiment Strategy: Professional Market Sentiment for Centrica positive
ANALYSIS: With an Obermatt Sentiment Rank of 62 (better than 62% compared with alternatives), overall professional sentiment and engagement for the stock Centrica is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Centrica. Analyst Opinions are at a rank of 47 (worse than 53% 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 23, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 64, which means that professional investors hold more stock in this company than in 64% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 89, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 89% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Centrica and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 62 (more positive than 62% compared with investment alternatives), Centrica has a reputation among professional investors that is above-average compared with that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Centrica Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 60 (better than 60% compared with alternatives), Centrica 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 are above average for Centrica. Price-to-Sales (P/S) is 85, which means that the stock price compared with what market professionals expect for future sales is lower than for 85% of comparable companies, indicating a good value concerning Centrica's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 84% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 45 (dividends are expected to be higher than for 45% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 99% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for Centrica to 1. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 60, is a buy recommendation based on Centrica's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner on assets than its competitors. For instance, the company could be leasing its production facilities, or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the low Dividend Yield is also explained as such companies tend to invest their income into market development. The other good value ranks for Sales and Profits are encouraging indicators for the stock price value. ...read more
Growth Strategy: Centrica Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 53 (better than 53% compared with alternatives), Centrica 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 Centrica. Capital Growth has a rank of 88, which means that currently professionals expect the company to grow its invested capital more than 28% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 95 (above 95% of alternative investments). But Sales Growth has only a rank of 6, which means that, currently, professionals expect the company to grow less than 94% of its competitors, and Profit Growth is also low at a rank of 28. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 53, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Centrica, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Centrica Debt Financing Safety very solid
| SAFETY METRICS | January 25, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 6 |
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| REFINANCING | ||||||||
| REFINANCING | 100 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 89 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 79 |
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ANALYSIS: With an Obermatt Safety Rank of 79 (better than 79% compared with alternatives) for 2024, the company Centrica has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Centrica 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 Centrica. Refinancing is at 100, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 100% of its competitors. Liquidity is also good at 89, meaning the company generates more profit to service its debt than 89% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 6, which means the company has an above-average debt-to-equity ratio. It has more debt than 94% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 79 (better than 79% compared with alternatives), Centrica 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 Centrica 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: Centrica Top Financial Performance
| COMBINED PERFORMANCE | January 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 60 |
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| GROWTH | ||||||||
| GROWTH | 53 |
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| SAFETY | ||||||||
| SAFETY | 89 |
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| COMBINED | ||||||||
| COMBINED | 78 |
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ANALYSIS: With an Obermatt Combined Rank of 78 (better than 78% compared with investment alternatives), Centrica (Multi-Utilities, United Kingdom) shares have much better financial characteristics than comparable stocks. Shares of Centrica are a good value (attractively priced) with a consolidated Value Rank of 60 (better than 60% of alternatives), show above-average growth (Growth Rank of 53), and are safely financed (Safety Rank of 79), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 78, is a strong buy recommendation based on Centrica's financial characteristics. As the company Centrica's key financial metrics all exhibit excellent performance, such as good value (Obermatt Value Rank of 60), above-average growth (Obermatt Growth Rank of 53), and indicate that the company is safely financed (Obermatt Safety Rank of 79), it is a solid stock investment where the risk of paying too much for the share is limited, unless the company has a bleak future. Such good financial performance can indicate that the company's future might actually be challenging, as it may be difficult to maintain the good performance. If they are safely financed and have been growing above average, and are still a good value, it means that the market is keeping prices low, for a reason which may become clearer over time. We recommend evaluating the future of Centrica. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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