November 2, 2023
Top 10 Stock HEXPOL 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: HEXPOL – Top 10 Stock in SDG 9: Industry, Innovation and Infrastructure
HEXPOL is listed as a top 10 stock on November 02, 2023 in the market index SDG 9 because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company enjoys a positive professional investor sentiment, but all financial facts speak against a stock purchase. This is probably an investment into the future. Based on the Obermatt 360° View of 78 (top 78% performer), Obermatt assesses an overall strong buy recommendation for HEXPOL on November 02, 2023.
Snapshot: Obermatt Ranks
| Country | Sweden |
| Industry | Specialty Chemicals |
| Index | Energy Efficient, Diversity Europe, Human Rights, SDG 12, SDG 13, SDG 7, SDG 8, SDG 9 |
| 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 HEXPOL Strong Buy
| 360 METRICS | November 2, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 45 |
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| GROWTH | ||||||||
| GROWTH | 43 |
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| SAFETY | ||||||||
| SAFETY | 49 |
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| SENTIMENT | ||||||||
| SENTIMENT | 100 |
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| 360° VIEW | ||||||||
| 360° VIEW | 78 |
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ANALYSIS: With an Obermatt 360° View of 78 (better than 78% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock HEXPOL are very positive. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for HEXPOL. 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 all other ranks are below average. The consolidated Value Rank has a rank of 45, which means that the share price of HEXPOL is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 43, meaning that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. This means that growth is lower than for 43% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 49 which means that the company has a riskier financing structure than 51% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 78, HEXPOL is better positioned than 78% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 100) is above-average, and all other consolidated Obermatt Ranks are below peers, the stock investing proposition case is rather weak. The stock price is expensive for a company of this size in this industry, visible in the below-average Value Rank. Growth is below the competition based on the Growth Rank, and the company has more debt than other companies, according to the Safety Rank. So the question becomes: How important is the Sentiment Rank when all others are below average? When it comes to growth, the low rating might be justified if growth is expected in the future and not yet reflected in current performance. This is often the case for companies with intellectual property, such as technology and pharmaceutical companies. In the early phases, these companies are expensive compared with their size and may have a lot of debt on their books, as is the case here, as seen in the low Value and Safety Ranks. Future growth may be the strongest investment rationale in this case, which is only reflected by institutional investors' opinions. You pay more than the market average for this stock and invest in a rather debt-loaded enterprise, but it may be worth it if the future of HEXPOḶ is bright. A small investment might be justified, but proceed with caution. ...read more
Sentiment Strategy: Professional Market Sentiment for HEXPOL very positive
ANALYSIS: With an Obermatt Sentiment Rank of 100 (better than 100% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock HEXPOL is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for HEXPOL. Analyst Opinions are at a rank of 68 (better than 68% 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 with a rank of 87, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in HEXPOL. The Professional Investors rank is 80, which means that currently, professional investors hold more stock in this company than in 80% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 97 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 97% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 100 (more positive than 100% compared with investment alternatives), HEXPOL has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean HEXPOL stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: HEXPOL Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 45 (worse than 55% compared with alternatives), HEXPOL 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 HEXPOL. Price-to-Profit (also referred to as price-earnings, P/E) is 70 which means that the stock price compared with what market professionals expect for future profits is lower than for 70% of comparable companies, indicating a good value concerning HEXPOL'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 37, which means that the stock price is lower as regards to invested capital than for 37% of comparable investments. On the other hand, Price-to-Sales is less favorable than 75% of alternatives (only 25% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 26% 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 45, is a hold recommendation based on HEXPOL'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: HEXPOL Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 43 (better than 43% compared with alternatives), HEXPOL shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for HEXPOL. Profit Growth has a rank of 74, which means that currently professionals expect the company to grow its profits more than 74% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 59 (above 59% of alternative investments). But Sales Growth has a below the median rank of 12, which means that, currently, professionals expect the company to grow less than 88% of its competitors, and Capital Growth also has a lower rank of 33. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 43, is a hold 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 HEXPOL. ...read more
Safety Strategy: HEXPOL Debt Financing Safety below-average
| SAFETY METRICS | November 2, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 68 |
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| REFINANCING | ||||||||
| REFINANCING | 9 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 78 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 49 |
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ANALYSIS: With an Obermatt Safety Rank of 49 (better than 49% compared with alternatives), the company HEXPOL has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of HEXPOL 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 two out of three indicators above average for HEXPOL. Leverage is at a rank of 68, meaning the company has a below-average debt-to-equity ratio. It has less debt than 68% of its competitors. Liquidity is also good at a rank of 78, meaning the company generates more profit to service its debt than 78% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 9, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 91% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 49 (worse than 51% compared with alternatives), HEXPOL has a financing structure that is riskier than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for HEXPOL. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: HEXPOL Below-Average Financial Performance
| COMBINED PERFORMANCE | November 2, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 45 |
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| GROWTH | ||||||||
| GROWTH | 43 |
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| SAFETY | ||||||||
| SAFETY | 78 |
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| COMBINED | ||||||||
| COMBINED | 33 |
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ANALYSIS: With an Obermatt Combined Rank of 33 (worse than 67% compared with investment alternatives), HEXPOL (Specialty Chemicals, Sweden) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of HEXPOL are low in value (priced high) with a consolidated Value Rank of 45 (worse than 55% of alternatives), show below-average growth (Growth Rank of 43), and are riskily financed (Safety Rank of 49), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 33, is a hold recommendation based on HEXPOL's financial characteristics. As the company HEXPOL's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 45), low growth (Obermatt Growth Rank of 43), and risky financing practices (Obermatt Safety Rank of 49), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
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