May 11, 2023
Top 10 Stock DSM 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: DSM – Top 10 Stock in AEX Index
DSM is listed as a top 10 stock on May 11, 2023 in the market index AEX because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° Rank of 99 (top 99% performer), Obermatt assesses an overall strong buy recommendation for DSM on May 11, 2023.
Snapshot: Obermatt Ranks
| Country | Netherlands |
| Industry | Specialty Chemicals |
| Index | AEX, Employee Focus EU, Energy Efficient, Diversity Europe, SDG 12, SDG 13, SDG 2, SDG 3, SDG 7 |
| 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° Assessment DSM Strong Buy
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 91 |
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| SAFETY | ||||||||
| SAFETY | 86 |
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| SENTIMENT | ||||||||
| SENTIMENT | 81 |
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| 360° VIEW | ||||||||
| 360° VIEW | 99 |
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ANALYSIS: With an Obermatt 360° Rank of 99 (better than 99% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock DSM are very positive. The 360° Rank is based on consolidating four consolidated indicators, with all but one indicator above average for DSM. The consolidated Growth Rank has a good rank of 91, 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 91% of competitors in the same industry. The consolidated Safety Rank at 86 means that the company has a financing structure that is safer than 86 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 81, which means that professional investors are more optimistic about the stock than for 81% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 49, meaning that the share price of DSM is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 51% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a 360° Rank of 99, DSM is better than 99% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 91), a safe financing structure (Safety Rank of 86), and positive professional market sentiment (Sentiment Rank of 81), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. 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 more do you pay for the stock of DSM compared with alternatives? You can use the following rule of dumb: The growth rank reflects where the growth momentum of the company is (91% better than peers). The value rank could be the reverse reflection of that (9%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just extrapolates the past, but sometimes they are right. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for DSM very positive
ANALYSIS: With an Obermatt Sentiment Rank of 81 (better than 81% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock DSM is very positive. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for DSM. Analyst Opinions are at a rank of 63 (better than 63% 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 93, which means that currently, professional investors hold more stock in this company than in 93% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 72 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 72% of competitors). But Analyst Opinions Change has a below-average rank of 22, 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 DSM. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 81 (more positive than 81% compared with investment alternatives), DSM 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: DSM Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 49 (worse than 51% compared with alternatives), DSM shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for DSM. Price-to-Sales (P/S) has a value of 90, which means that the stock price compared with what market professionals expect for future sales is lower than 90% of comparable companies, indicating a good value concerning DSM's revenue size. The same is valid for dividend yields with an Obermatt Dividend Yield rank of 51, which means that dividends are expected to be higher than 51% of comparable investments. On the other hand, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 57% of alternatives (only 43% of peers have an even higher ratio). The same is valid for Price-to-Profit (or Price / Earnings, P/E), which is higher than 91% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 49, is a HOLD recommendation based on DSM's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. ...read more
Growth Strategy: DSM Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 91 (better than 91% compared with alternatives) for 2023, DSM 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 DSM. Sales Growth has a value of 84 which means that currently professionals expect the company to grow more than 84% of its competitors. Profit Growth with a value of 79 and Capital Growth with a rank of 81 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 27, which means that stock returns have recently been below 73% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 91, is a BUY recommendation for growth and momentum investors. DSM 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 DSM, 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: DSM Debt Financing Safety very solid
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 75 |
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| REFINANCING | ||||||||
| REFINANCING | 100 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 30 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 86 |
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ANALYSIS: With an Obermatt Safety Rank of 86 (better than 86% compared with alternatives) for 2023, the company DSM has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of DSM 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 where two out of three are above average for DSM.Leverage is at 75, meaning the company has a below-average debt-to-equity ratio. It has less debt than 75% of its competitors.Refinancing is at a rank of 100, meaning that 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 at 30, meaning that the company generates less profit to service its debt than 70% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 86 (better than 86% compared with alternatives), DSM has a financing structure that is significantly safer than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. ...read more
Combined financial peformance: DSM Top Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 91 |
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| SAFETY | ||||||||
| SAFETY | 30 |
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| COMBINED | ||||||||
| COMBINED | 96 |
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ANALYSIS: With an Obermatt Combined Rank of 96 (better than 96% compared with investment alternatives), DSM (Specialty Chemicals, Netherlands) shares have much better financial characteristics than comparable stocks. Shares of DSM are low in value (priced high) with a consolidated Obermatt Value Rank of 49 (worse than 51% of alternatives). But they show above-average growth (Growth Rank of 91) and are safely financed (Safety Rank of 86, which means below-average debt burdens). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 96, is a strong buy recommendation based on DSM's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company DSM exhibits low value (Obermatt Value Rank of 49), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 91). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 86) 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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