January 25, 2024
Top 10 Stock Fortum 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: Fortum – Top 10 Stock in Nuclear Energy
Fortum 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. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° View of 38 (38% performer), Obermatt assesses an overall hold recommendation for Fortum on January 25, 2024.
Snapshot: Obermatt Ranks
| Country | Finland |
| Industry | Electric Utilities |
| Index | OMX 25, Low Emissions, Dividends Europe, Nuclear |
| 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 Fortum Hold
| 360 METRICS | January 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 68 |
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| GROWTH | ||||||||
| GROWTH | 3 |
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| SAFETY | ||||||||
| SAFETY | 89 |
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| SENTIMENT | ||||||||
| SENTIMENT | 24 |
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| 360° VIEW | ||||||||
| 360° VIEW | 38 |
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ANALYSIS: With an Obermatt 360° View of 38 (better than 38% compared with alternatives), overall professional sentiment and financial characteristics for the stock Fortum are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Fortum. The consolidated Value Rank has an attractive rank of 68, which means that the share price of Fortum 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 68% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 89. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 24. Professional investors are more confident in 76% other stocks. The consolidated Growth Rank also has a low rank of 3, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 97 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 38, Fortum is worse than 62% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 68), and the financing structure is on the safer side (Safety Rank of 89). However, sentiment in the professional investor community is below-average (Sentiment Rank of 24), as is the growth momentum for the company (Growth Rank of 3). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still 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 Fortum negative
ANALYSIS: With an Obermatt Sentiment Rank of 24 (better than 24% compared with alternatives), overall professional sentiment and engagement for the stock Fortum is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Fortum. Analyst Opinions are at a rank of 31 (worse than 69% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Fortum. More encouragingly, the Professional Investors rank is 60, which means that professional investors hold more stock in this company than in 60% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 19, 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 81% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 24 (less encouraging than 76% compared with investment alternatives), Fortum has a reputation among professional investors that is far below that of its competitors. The sentiment signals are mixed for Fortum. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: Fortum Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 68 (better than 68% compared with alternatives), Fortum shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Fortum. Price-to-Profit (also referred to as price-earnings, P/E) is 63 which means that the stock price compared with what market professionals expect for future profits is lower than for 63% of comparable companies, indicating a good value concerning Fortum's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 42, which means that the stock price is lower as regards to invested capital than for 42% of comparable investments. On the other hand, Price-to-Sales is less favorable than 64% of alternatives (only 36% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 4% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 68, is a buy recommendation based on Fortum's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Fortum Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 3 (better than 3% compared with alternatives), Fortum shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Fortum. Sales Growth has a rank of 14, which means that currently professionals expect the company to grow less than 86% of its competitors. The same is valid for Profit Growth, with a rank of 21, and Capital Growth with 16. In addition, Stock Returns have a below market rank of 49, which means that the stock returns have recently been below 51% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 3, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Fortum Debt Financing Safety very solid
| SAFETY METRICS | January 25, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 62 |
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| REFINANCING | ||||||||
| REFINANCING | 89 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 75 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 89 |
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ANALYSIS: With an Obermatt Safety Rank of 89 (better than 89% compared with alternatives) for 2024, the company Fortum has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Fortum 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 all three are above average for Fortum. Leverage is at 62, meaning the company has a below-average debt-to-equity ratio. It has less debt than 62% of its competitors. Refinancing is at a rank of 89, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 89% of its competitors. Finally, Liquidity is also good at a rank of 75, which means that the company generates more profit to service its debt than 75% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 89 (better than 89% compared with alternatives), Fortum has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Fortum Above-Average Financial Performance
| COMBINED PERFORMANCE | January 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 68 |
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| GROWTH | ||||||||
| GROWTH | 3 |
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| SAFETY | ||||||||
| SAFETY | 75 |
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| COMBINED | ||||||||
| COMBINED | 57 |
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ANALYSIS: With an Obermatt Combined Rank of 57 (better than 57% compared with investment alternatives), Fortum (Electric Utilities, Finland) shares have above-average financial characteristics compared with similar stocks. Shares of Fortum are a good value (attractively priced) with a consolidated Value Rank of 68 (better than 68% of alternatives), are safely financed (Safety Rank of 89, which means low debt burdens), but show below-average growth (Growth Rank of 3). ...read more
RECOMMENDATION: A Combined Rank of 57, is a buy recommendation based on Fortum's financial characteristics. As the company Fortum's key financial metrics exhibit good value (Obermatt Value Rank of 68) but low growth (Obermatt Growth Rank of 3) while being safely financed (Obermatt Safety Rank of 89), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 68% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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