February 1, 2024
Top 10 Stock JD Sports 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: JD Sports – Top 10 Stock in FTSE 100 Index
JD Sports is listed as a top 10 stock on February 01, 2024 in the market index FTSE 100 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 70 (high 70% performer), Obermatt assesses an overall buy recommendation for JD Sports on February 01, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Specialty Stores |
| Index | FTSE All Shares, FTSE 100, FTSE 350, Renewables Users |
| 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 JD Sports Buy
| 360 METRICS | February 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 63 |
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| GROWTH | ||||||||
| GROWTH | 45 |
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| SAFETY | ||||||||
| SAFETY | 65 |
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| SENTIMENT | ||||||||
| SENTIMENT | 47 |
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| 360° VIEW | ||||||||
| 360° VIEW | 70 |
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ANALYSIS: With an Obermatt 360° View of 70 (better than 70% compared with alternatives), overall professional sentiment and financial characteristics for the stock JD Sports are above average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for JD Sports. The consolidated Value Rank has an attractive rank of 63, which means that the share price of JD Sports 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 63% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 65. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 47. Professional investors are more confident in 53% other stocks. The consolidated Growth Rank also has a low rank of 45, 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. 55 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 70, JD Sports is better positioned than 70% 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 63), and the financing structure is on the safer side (Safety Rank of 65). However, sentiment in the professional investor community is below-average (Sentiment Rank of 47), as is the growth momentum for the company (Growth Rank of 45). 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 JD Sports only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 47 (better than 47% compared with alternatives), overall professional sentiment and engagement for the stock JD Sports is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for JD Sports. Analyst Opinions are at a rank of 82 (better than 82% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 56, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 56% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 4, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in JD Sports. There are also only so many institutional investors holding company stock with a Professional Investors rank of 43, which means that, currently, professional investors hold less stock in this company than in 57% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 47 (less encouraging than 53% compared with investment alternatives), JD Sports has a reputation among professional investors that is below that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more
Value Strategy: JD Sports Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 63 (better than 63% compared with alternatives), JD Sports 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 JD Sports. Price-to-Profit (also referred to as price-earnings, P/E) is 80 which means that the stock price compared with what market professionals expect for future profits is lower than for 80% of comparable companies, indicating a good value concerning JD Sports'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 28, which means that the stock price is lower as regards to invested capital than for 28% of comparable investments. On the other hand, Price-to-Sales is less favorable than 70% of alternatives (only 30% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 33% 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 63, is a buy recommendation based on JD Sports'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: JD Sports Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 45 (better than 45% compared with alternatives), JD Sports 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 three out of four indicators below-average for JD Sports. While Sales Growth ranks at 71, professionals currently expect the company to grow more than 71% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 41, which means that, currently, professionals expect the company to grow its profits less than 59% of its competitors, and Capital Growth has a low rank of 47. Historic stock returns were also below average with a current Stock Returns rank of 34 which means that the stock returns have recently been below 66% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 45, is a hold recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. ...read more
Safety Strategy: JD Sports Debt Financing Safety above-average
| SAFETY METRICS | February 1, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 37 |
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| REFINANCING | ||||||||
| REFINANCING | 50 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 86 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 65 |
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ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), the company JD Sports 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 JD Sports 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 two out of three indicators above-average for JD Sports. Refinancing is at 50, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 50% of its competitors. Liquidity is also good at 86, meaning the company generates more profit to service its debt than 86% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 37, which means the company has an above-average debt-to-equity ratio. It has more debt than 63% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 65 (better than 65% compared with alternatives), JD Sports has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and JD Sports could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: JD Sports Top Financial Performance
| COMBINED PERFORMANCE | February 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 63 |
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| GROWTH | ||||||||
| GROWTH | 45 |
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| SAFETY | ||||||||
| SAFETY | 86 |
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| COMBINED | ||||||||
| COMBINED | 78 |
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ANALYSIS: With an Obermatt Combined Rank of 78 (better than 78% compared with investment alternatives), JD Sports (Specialty Stores, United Kingdom) shares have much better financial characteristics than comparable stocks. Shares of JD Sports are a good value (attractively priced) with a consolidated Value Rank of 63 (better than 63% of alternatives), are safely financed (Safety Rank of 65, which means low debt burdens), but show below-average growth (Growth Rank of 45). ...read more
RECOMMENDATION: A Combined Rank of 78, is a strong buy recommendation based on JD Sports's financial characteristics. As the company JD Sports's key financial metrics exhibit good value (Obermatt Value Rank of 63) but low growth (Obermatt Growth Rank of 45) while being safely financed (Obermatt Safety Rank of 65), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 63% 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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