January 25, 2024
Top 10 Stock Dechra Sell 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: Dechra – Top 10 Stock in FTSE 350 Index
Dechra is listed as a top 10 stock on January 25, 2024 in the market index FTSE 350 because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 20 (20% performer), Obermatt issues an overall sell recommendation for Dechra on January 25, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Pharmaceuticals |
| Index | FTSE All Shares, FTSE 250, FTSE 350 |
| 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 Dechra Sell
| 360 METRICS | January 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 17 |
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| GROWTH | ||||||||
| GROWTH | 97 |
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| SAFETY | ||||||||
| SAFETY | 12 |
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| SENTIMENT | ||||||||
| SENTIMENT | 30 |
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| 360° VIEW | ||||||||
| 360° VIEW | 20 |
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ANALYSIS: With an Obermatt 360° View of 20 (better than 20% compared with alternatives), overall professional sentiment and financial characteristics for the stock Dechra are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Dechra. The consolidated Growth Rank has a good rank of 97, 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. It ranks higher than 97% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 17 means that the share price of Dechra is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 83% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 12, which means that the company has a riskier financing structure than 88% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 30, indicating professional investors are more pessimistic about the stock than for 70% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 20, Dechra is worse than 80% of all alternative stock investment opportunities based on the Obermatt Method. This means that Dechra shares are on the riskier side for investors. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 97), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 30), the company is rather risky when it comes to financing (Safety Rank of 12). The negative market view on Dechra 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 join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of Dechra compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one 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 (even though it is lower than 50). As market sentiment is critical, 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 Dechra only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 30 (better than 30% compared with alternatives), overall professional sentiment and engagement for the stock Dechra is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Dechra. Analyst Opinions are at a rank of 73 (better than 73% 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 and has a rank of 50 which means that currently, stock research experts are getting even more optimistic about investments in Dechra. But Market Pulse has a low rank of 21, 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 79% of competitors). This is an essential sign of caution, as it could be the forebearer of bad news. Professional Investors are also somewhat absent with a rank of 27, which means that, currently, professional investors hold less stock in this company than in 73% of alternative investment opportunities. Pros tend to invest in other companies. This is expected if the company is of a smaller size (medium or smaller). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 30 (less encouraging than 70% compared with investment alternatives), Dechra has a reputation among professional investors that is below that of its competitors. While the general news feeds in the professional market are negative, the analyst recommendations are optimistic about the company, and even increase their ratings despite the negative news. This is an ambiguous situation with positive and negative signals from the professional side. Investors should be on the lookout for negative news but not worry too much about it as long as the overall news is still positive. ...read more
Value Strategy: Dechra Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 17 (worse than 83% compared with alternatives), Dechra 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 Dechra. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 55% 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 22 which means that the stock price compared with what market professionals expect for future profits is higher than 78% of comparable companies, indicating a low value concerning Dechra's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 20 which means that the stock price compared with what market professionals expect for future profit levels is higher than 80% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 25 is also low. Compared with invested capital, the stock price is higher than for 75% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 17, is a sell recommendation based on Dechra's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Dechra? 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 Dechra only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Dechra Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 97 (better than 97% compared with alternatives) for 2024, Dechra 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 four indicators above average for Dechra. Sales Growth has a value of 64, which means that, currently, professionals expect the company to grow more than 64% of its competitors. The same is valid for Profit Growth with a value of 76 and for Capital Growth with 87. In addition, Stock Returns had an above-average rank value of 88, which means they have been higher than 88% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 97, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Dechra 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: Dechra Debt Financing Safety risky
| SAFETY METRICS | January 25, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 22 |
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| REFINANCING | ||||||||
| REFINANCING | 31 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 27 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 12 |
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ANALYSIS: With an Obermatt Safety Rank of 12 (better than 12% compared with alternatives), the company Dechra 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 Dechra 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 all three metrics below average for Dechra. Liquidity is at 27, meaning that the company generates less profit to service its debt than 73% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 22, meaning the company has an above-average debt-to-equity ratio. It has more debt than 78% of its competitors. Finally, Refinancing is at a rank of 31 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 69% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 12 (worse than 88% compared with alternatives), Dechra has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing.
Combined financial peformance: Dechra Below-Average Financial Performance
| COMBINED PERFORMANCE | January 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 17 |
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| GROWTH | ||||||||
| GROWTH | 97 |
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| SAFETY | ||||||||
| SAFETY | 27 |
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| COMBINED | ||||||||
| COMBINED | 28 |
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ANALYSIS: With an Obermatt Combined Rank of 28 (worse than 72% compared with investment alternatives), Dechra (Pharmaceuticals, United Kingdom) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Dechra 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 12, which means above-average debt burdens) but show above-average growth (Growth Rank of 97). ...read more
RECOMMENDATION: A Combined Rank of 28, is a hold recommendation based on Dechra's financial characteristics. As the company Dechra 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 97% of comparable companies (Obermatt Growth Rank is 97). 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 12 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 Dechra, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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