November 23, 2023
Top 10 Stock DS Smith 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: DS Smith – Top 10 Stock in FTSE All Share Index
DS Smith is listed as a top 10 stock on November 23, 2023 in the market index FTSE All Shares because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is below average and thus a signal for caution. Based on the Obermatt 360° View of 45 (45% performer), Obermatt assesses an overall hold recommendation for DS Smith on November 23, 2023.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Paper Packaging |
| Index | FTSE All Shares, FTSE 100, FTSE 350, Low Emissions, Dividends Europe, Human Rights, Renewables Users |
| Size class | X-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 DS Smith Hold
| 360 METRICS | November 23, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 85 |
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| GROWTH | ||||||||
| GROWTH | 57 |
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| SAFETY | ||||||||
| SAFETY | 8 |
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| SENTIMENT | ||||||||
| SENTIMENT | 46 |
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| 360° VIEW | ||||||||
| 360° VIEW | 45 |
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ANALYSIS: With an Obermatt 360° View of 45 (better than 45% compared with alternatives), overall professional sentiment and financial characteristics for the stock DS Smith 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 DS Smith. The consolidated Value Rank has an attractive rank of 85, which means that the share price of DS Smith 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 85% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 57, 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. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 46. Professional investors are more confident in 54% other stocks. Worryingly, the company has risky financing, with a Safety rank of 8. This means 92% of comparable companies have a safer financing structure than DS Smith. ...read more
RECOMMENDATION: With a consolidated 360° View of 45, DS Smith is worse than 55% of all alternative stock investment opportunities based on the Obermatt Method. Even though half of the consolidated Obermatt Ranks are above-average, namely the Value Rank at 85 and the Growth Rank above-average at 57, the picture is still mixed. The professional investor community is skeptical, with the Sentiment Rank below-average at 46. In addition, the company financing structure is on the riskier side (Safety Rank of 8). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. One may be tempted by above-average growth, but that could also change quickly, as past performance is not a good indicator of future performance. Since the financing structure is on the risky side, investors should be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for DS Smith only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 46 (better than 46% compared with alternatives), overall professional sentiment and engagement for the stock DS Smith 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 DS Smith. Analyst Opinions are at a rank of 36 (worse than 64% 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 46, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 62, which means that professional investors hold more stock in this company than in 62% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 62, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 62% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to DS Smith and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 46 (less encouraging than 54% compared with investment alternatives), DS Smith has a reputation among professional investors that is below 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: DS Smith Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 85 (better than 85% compared with alternatives) for 2023, DS Smith shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for DS Smith. Price-to-Sales is 57 which means that the stock price compared with what market professionals expect for future sales is lower than for 57% of comparable companies, indicating a good value for DS Smith's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 81% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 62. Compared with other companies in the same industry, dividend yields of DS Smith are expected to be higher than for 96% of all competitors (a Dividend Yield rank of 96). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 85, is a buy recommendation based on DS Smith's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in DS Smith based on its detailed value metrics.
Growth Strategy: DS Smith Growth Momentum good
| GROWTH METRICS | November 23, 2023 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 42 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 63 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 40 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 63 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 57 |
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ANALYSIS: With an Obermatt Growth Rank of 57 (better than 57% compared with alternatives), DS Smith 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 DS Smith. Profit Growth has a rank of 63, which means that currently professionals expect the company to grow its profits more than 63% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 63 (above 63% of alternative investments). But Sales Growth has a below the median rank of 42, which means that, currently, professionals expect the company to grow less than 58% of its competitors, and Capital Growth also has a lower rank of 40. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 57, is a buy recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for DS Smith. ...read more
Safety Strategy: DS Smith Debt Financing Safety risky
| SAFETY METRICS | November 23, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 45 |
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| REFINANCING | ||||||||
| REFINANCING | 4 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 41 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 8 |
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ANALYSIS: With an Obermatt Safety Rank of 8 (better than 8% compared with alternatives), the company DS Smith 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 DS Smith 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 DS Smith. Liquidity is at 41, meaning that the company generates less profit to service its debt than 59% 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 45, meaning the company has an above-average debt-to-equity ratio. It has more debt than 55% of its competitors. Finally, Refinancing is at a rank of 4 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 96% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 8 (worse than 92% compared with alternatives), DS Smith 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: DS Smith Below-Average Financial Performance
| COMBINED PERFORMANCE | November 23, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 85 |
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| GROWTH | ||||||||
| GROWTH | 57 |
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| SAFETY | ||||||||
| SAFETY | 41 |
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| COMBINED | ||||||||
| COMBINED | 48 |
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ANALYSIS: With an Obermatt Combined Rank of 48 (worse than 52% compared with investment alternatives), DS Smith (Paper Packaging, United Kingdom) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of DS Smith are a good value (attractively priced) with a consolidated Value Rank of 85 (better than 85% of alternatives), show above-average growth (Growth Rank of 57) but are riskily financed (Safety Rank of 8), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 48, is a hold recommendation based on DS Smith's financial characteristics. As the company DS Smith's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 85) and above-average growth (Obermatt Growth Rank of 57), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 8) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. 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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