June 1, 2023
Top 10 Stock Howden 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: Howden – Top 10 Stock in SDG 15: Life on Land
Howden is listed as a top 10 stock on June 01, 2023 in the market index SDG 15 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 60 (high 60% performer), Obermatt assesses an overall buy recommendation for Howden on June 01, 2023.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Trading & Distribution |
| Index | FTSE All Shares, FTSE 250, FTSE 350, SDG 12, SDG 13, SDG 15, SDG 8, Water Tech |
| 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° Assessment Howden Buy
| 360 METRICS | June 1, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 50 |
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| GROWTH | ||||||||
| GROWTH | 20 |
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| SAFETY | ||||||||
| SAFETY | 55 |
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| SENTIMENT | ||||||||
| SENTIMENT | 86 |
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| 360° VIEW | ||||||||
| 360° VIEW | 60 |
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ANALYSIS: With an Obermatt 360° View of 60 (better than 60% compared with alternatives), overall professional sentiment and engagement for the stock Howden are above average. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Howden. The consolidated Value Rank has an attractive rank of 50, which means that the share price of Howden is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 50% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 55. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 86. But the consolidated Growth Rank has a low rank of 20, which means that the company is below average in terms of growth, and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 80 of its competitors have better growth. ...read more
RECOMMENDATION: With a 360° View of 60, Howden is better than 60% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 50), secure financing practices (Safety Rank of 55), and positive market sentiment in the professional investor community (Sentiment Rank of 86). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company growth expectations are below the industry average (Growth Rank of 20), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good value ranking can sometimes indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Howden is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Howden very positive
ANALYSIS: With an Obermatt Sentiment Rank of 86 (better than 86% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Howden is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Howden. Analyst Opinions are at a rank of 71 (better than 71% 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 60, 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 Howden. The Professional Investors rank is 86, which means that currently, professional investors hold more stock in this company than in 86% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 53 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 53% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 86 (more positive than 86% compared with investment alternatives), Howden 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 Howden 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: Howden Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 50 (better than 50% compared with alternatives), Howden 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 Howden. Price-to-Profit (also referred to as price-earnings, P/E) is 56 which means that the stock price compared with what market professionals expect for future profits is lower than for 56% of comparable companies, indicating a good value concerning Howden's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with an Price-to-Book Rank of 25, which means that the stock price is lower compared with invested capital than for 25% of comparable investments. On the other hand, Price-to-Sales is less favorable than 68% of alternatives (only 32% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 36% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 50, is a BUY recommendation based on Howden'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. This needs to be investigated, and the company's optimism verified before deciding to buy the stock. ...read more
Growth Strategy: Howden Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 20 (better than 20% compared with alternatives), Howden 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 half of the indicators below and half above average for Howden. Sales Growth has a rank of 60 which means that currently professionals expect the company to grow more than 60% of its competitors. Stock Returns are also above average with a rank of 57. But Capital Growth has only a rank of 8, which means that currently professionals expect the company to grow its invested capital less than 92% of its competitors. Profit Growth is also low, with a rank of only 14, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 20, is a SELL recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 57% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more
Safety Strategy: Howden Debt Financing Safety above-average
| SAFETY METRICS | June 1, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 41 |
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| REFINANCING | ||||||||
| REFINANCING | 35 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 77 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 55 |
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ANALYSIS: With an Obermatt Safety Rank of 55 (better than 55% compared with alternatives), the company Howden 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 Howden 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, with just one indicator above average for Howden. Liquidity is at 77, meaning the company generates more profit to service its debt than 77% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 35, 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 65% of its competitors. Leverage is also high at a rank of 41, which means that the company has an above-average debt-to-equity ratio. It has more debt than 59% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 55 (better than 55% compared with alternatives), Howden has a financing structure that is safer than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usuallyl indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Howden Below-Average Financial Performance
| COMBINED PERFORMANCE | June 1, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 50 |
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| GROWTH | ||||||||
| GROWTH | 20 |
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| SAFETY | ||||||||
| SAFETY | 77 |
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| COMBINED | ||||||||
| COMBINED | 38 |
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ANALYSIS: With an Obermatt Combined Rank of 38 (worse than 62% compared with investment alternatives), Howden (Trading & Distribution, United Kingdom) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Howden are a good value (attractively priced) with a consolidated Obermatt Value Rank of 50 (better than 50% of alternatives), are safely financed (Safety Rank of 55, which means low debt burdens), but show below-average growth (Growth Rank of 20). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 38, is a hold recommendation based on Howden's financial characteristics. As the company Howden's key financial metrics exhibit good value (Obermatt Value Rank of 50) but low growth (Obermatt Growth Rank of 20) while being safely financed (Obermatt Safety Rank of 55), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 50% 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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