August 24, 2023
Top 10 Stock Lancaster Colony 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: Lancaster Colony – Top 10 Stock in S&P Food & Beverage Index
Lancaster Colony is listed as a top 10 stock on August 24, 2023 in the market index S&P US Food & Beverage because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is safely financed, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 55 (high 55% performer), Obermatt assesses an overall buy recommendation for Lancaster Colony on August 24, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Packaged Foods & Meats |
| Index | NASDAQ, S&P US Food & Beverage, S&P MIDCAP |
| 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 Lancaster Colony Buy
| 360 METRICS | August 24, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 23 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 90 |
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| SENTIMENT | ||||||||
| SENTIMENT | 47 |
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| 360° VIEW | ||||||||
| 360° VIEW | 55 |
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ANALYSIS: With an Obermatt 360° View of 55 (better than 55% compared with alternatives), overall professional sentiment and financial characteristics for the stock Lancaster Colony are above average. The 360° View is based on consolidating four consolidated indicators, with three out of four metrics below average for Lancaster Colony. The only rank that is above average is the consolidated Safety Rank at 90, which means that the company has a financing structure that is safer than those of 90% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the Value, Growth and Sentiment Ranks are all below average. The consolidated Value Rank has a less desirable rank of 23, which means that the share price of Lancaster Colony is on the high side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 41, which implies that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. Finally, the consolidated Sentiment Rank is also low at a rank of 47, which means that professional investors are more pessimistic about the stock than for 53% of alternative investment opportunities. While Safety is strong, it’s not the most critical indicator, so we suggest proceeding with caution if you are considering this stock. ...read more
RECOMMENDATION: With a consolidated 360° View of 55, Lancaster Colony is better positioned than 55% of all alternative stock investment opportunities based on the Obermatt Method. As only the financing structure, namely the Safety Rank, is on the safer side and all other consolidated Obermatt Ranks are below-average, this is a riskier stock investment proposition. This is especially the case, since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 47. The negative market view on Lancaster Colony may be the high stock price (low value) or the low level of growth. This is a problem. As the Safety Rank is the least significant of the four consolidated Obermatt Ranks, we cannot identify enough positive facts that are visible today to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not visible from investor behavior today. As market sentiment is critical, you should be careful with paying more than market-average for this stock, and conduct further research into the company's future growth potential. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Lancaster Colony only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 47 (better than 47% compared with alternatives), overall professional sentiment and engagement for the stock Lancaster Colony is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Lancaster Colony. Analyst Opinions are at a rank of 33 (worse than 67% 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 Lancaster Colony. More encouragingly, the Professional Investors rank is 76, which means that professional investors hold more stock in this company than in 76% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 34, 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 66% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 47 (less encouraging than 53% compared with investment alternatives), Lancaster Colony has a reputation among professional investors that is below that of its competitors. The sentiment signals are mixed for Lancaster Colony. 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: Lancaster Colony Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 23 (worse than 77% compared with alternatives), Lancaster Colony shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Lancaster Colony. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 62% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 24 which means that the stock price compared with what market professionals expect for future profits is higher than 76% of comparable companies, indicating a low value concerning Lancaster Colony's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 26 which means that the stock price compared with what market professionals expect for future profit levels is higher than 74% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 16 is also low. Compared with invested capital, the stock price is higher than for 84% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 23, is a sell recommendation based on Lancaster Colony's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Lancaster Colony? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Lancaster Colony only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Lancaster Colony Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 41 (better than 41% compared with alternatives), Lancaster Colony 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 Lancaster Colony. Sales Growth has a rank of 67 which means that currently professionals expect the company to grow more than 67% of its competitors. Stock Returns are also above average with a rank of 91. But Capital Growth has only a rank of 7, which means that currently professionals expect the company to grow its invested capital less than 93% of its competitors. Profit Growth is also low, with a rank of only 18, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 41, is a hold 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 91% 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: Lancaster Colony Debt Financing Safety very solid
| SAFETY METRICS | August 24, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 90 |
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| REFINANCING | ||||||||
| REFINANCING | 26 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 96 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 90 |
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ANALYSIS: With an Obermatt Safety Rank of 90 (better than 90% compared with alternatives) for 2023, the company Lancaster Colony has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Lancaster Colony 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 Lancaster Colony. Leverage is at a rank of 90, meaning the company has a below-average debt-to-equity ratio. It has less debt than 90% of its competitors. Liquidity is also good at a rank of 96, meaning the company generates more profit to service its debt than 96% 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 26, 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 74% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 90 (better than 90% compared with alternatives), Lancaster Colony has a financing structure that is significantly safer 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 Lancaster Colony. 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: Lancaster Colony Above-Average Financial Performance
| COMBINED PERFORMANCE | August 24, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 23 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 96 |
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| COMBINED | ||||||||
| COMBINED | 53 |
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ANALYSIS: With an Obermatt Combined Rank of 53 (better than 53% compared with investment alternatives), Lancaster Colony (Packaged Foods & Meats, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Lancaster Colony are low in value (priced high) with a consolidated Value Rank of 23 (worse than 77% of alternatives) and show below-average growth (Growth Rank of 41) but are safely financed (Safety Rank of 90), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 53, is a buy recommendation based on Lancaster Colony's financial characteristics. As the company Lancaster Colony's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 23) and low growth (Obermatt Growth Rank of 41), 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. In this case, good financing practices (Obermatt Safety Rank of 90) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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