January 25, 2024
Top 10 Stock Grafton 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: Grafton – Top 10 Stock in FTSE 350 Index
Grafton 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. 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° View of 82 (top 82% performer), Obermatt assesses an overall strong buy recommendation for Grafton on January 25, 2024.
Snapshot: Obermatt Ranks
| Country | Ireland |
| Industry | Trading & Distribution |
| Index | FTSE All Shares, FTSE 250, FTSE 350, Sound Pay Europe |
| 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 Grafton Strong Buy
| 360 METRICS | January 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 42 |
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| GROWTH | ||||||||
| GROWTH | 53 |
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| SAFETY | ||||||||
| SAFETY | 61 |
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| SENTIMENT | ||||||||
| SENTIMENT | 100 |
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| 360° VIEW | ||||||||
| 360° VIEW | 82 |
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ANALYSIS: With an Obermatt 360° View of 82 (better than 82% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Grafton are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Grafton. 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. This means that growth is higher than for 53% of competitors in the same industry. The consolidated Safety Rank at 61 means that the company has a financing structure that is safer than 61% 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 100, which means that professional investors are more optimistic about the stock than for 100% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 42, meaning that the share price of Grafton is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 58% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 82, Grafton is better positioned than 82% 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 53), a safe financing structure (Safety Rank of 61), and positive professional market sentiment (Sentiment Rank of 100), 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 Grafton compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (53% better than peers). The value rank could be the reverse reflection of that (47%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Grafton very positive
ANALYSIS: With an Obermatt Sentiment Rank of 100 (better than 100% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Grafton is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Grafton. Analyst Opinions are at a rank of 80 (better than 80% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 100, which means that currently, stock research experts are getting even more optimistic. Obermatt Market Pulse further supports this with a rank of 88, which means that the current professional news and professional social networks are generally positive when discussing this company (more positive news than for 88% of competitors). But there are few stock holdings by institutional investors. The Professional Investors rank is low at 13, which means that currently, professional investors hold less stock in this company than in 87% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 100 (more positive than 100% compared with investment alternatives), Grafton has a reputation among professional investors that is significantly higher than that of its competitors. Not having too many professionals invested in Grafton may be less of an issue, especially if the stock is from a smaller company where professionals typically invest less. It is natural for professional investors to focus on large and extra-large companies, as they provide more safety. Smaller companies attract fewer professionals in the shareholder community. Overall, the signals from the professionals are still quite favorable for investments in Grafton. ...read more
Value Strategy: Grafton Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 42 (worse than 58% compared with alternatives), Grafton shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Grafton. Expected dividend yields are higher than for 61% of comparable companies (a Dividend Yield rank of 61), making the stock attractive. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 63, which means that the stock price is lower compared with invested capital than for 63% of comparable investments. But in respect to sales and profits, the picture is reversed. Price-to-Sales is 41 which means that the stock price compared with what market professionals expect for future profits is higher than for 59% of comparable companies, indicating a low value concerning Grafton's sales levels. The Price-to-Profit ratio (also referred to as price-earnings (P/E) ratio) is also unfavorable for Grafton with a rank of 28. This means that the stock price, compared with what market professionals expect for future profits, is higher than for 72% of comparable companies, indicating a low value concerning Grafton's profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 42, is a hold recommendation based on Grafton's stock price compared with the company's operational size and dividend yields. The company seems confident that it can generate a reasonable return on invested capital, because it pays an above-average dividend while profits are below what you would expect for a company with this stock price. If you agree with this practice and believe that profits will return to higher levels, as the current dividend policy suggests, Grafton may be an attractive investment. If this is not the case, you may want to be careful with this stock as it is also expensive compared with its expected revenue levels. ...read more
Growth Strategy: Grafton Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 53 (better than 53% compared with alternatives), Grafton 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 Grafton. Capital Growth has a rank of 98, which means that currently professionals expect the company to grow its invested capital more than 24% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 60 (above 60% of alternative investments). But Sales Growth has only a rank of 19, which means that, currently, professionals expect the company to grow less than 81% of its competitors, and Profit Growth is also low at a rank of 24. ...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 Grafton, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Grafton Debt Financing Safety above-average
| SAFETY METRICS | January 25, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 69 |
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| REFINANCING | ||||||||
| REFINANCING | 82 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 31 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 61 |
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ANALYSIS: With an Obermatt Safety Rank of 61 (better than 61% compared with alternatives), the company Grafton has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Grafton 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 Grafton.Leverage is at 69, meaning the company has a below-average debt-to-equity ratio. It has less debt than 69% of its competitors.Refinancing is at a rank of 82, 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 82% of its competitors. Liquidity is at 31, meaning that the company generates less profit to service its debt than 69% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 61 (better than 61% compared with alternatives), Grafton has a financing structure that is 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: Grafton Above-Average Financial Performance
| COMBINED PERFORMANCE | January 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 42 |
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| GROWTH | ||||||||
| GROWTH | 53 |
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| SAFETY | ||||||||
| SAFETY | 31 |
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| COMBINED | ||||||||
| COMBINED | 50 |
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ANALYSIS: With an Obermatt Combined Rank of 50 (better than 50% compared with investment alternatives), Grafton (Trading & Distribution, Ireland) shares have above-average financial characteristics compared with similar stocks. Shares of Grafton are low in value (priced high) with a consolidated Value Rank of 42 (worse than 58% of alternatives). But they show above-average growth (Growth Rank of 53) and are safely financed (Safety Rank of 61, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 50, is a buy recommendation based on Grafton's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Grafton exhibits low value (Obermatt Value Rank of 42), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 53). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 61) 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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