October 5, 2023
Top 10 Stock Royal Mail 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: Royal Mail – Top 10 Stock in SDG 10: Reduced Inequality
Royal Mail is listed as a top 10 stock on October 05, 2023 in the market index SDG 10 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 below average and thus a signal for caution. Based on the Obermatt 360° View of 82 (top 82% performer), Obermatt assesses an overall strong buy recommendation for Royal Mail on October 05, 2023.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Air Freight & Logistics |
| Index | FTSE All Shares, FTSE 250, FTSE 350, Employee Focus EU, Human Rights, SDG 10, SDG 11, SDG 13, SDG 3, SDG 8 |
| Size class | XX-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 Royal Mail Strong Buy
| 360 METRICS | October 5, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 62 |
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| GROWTH | ||||||||
| GROWTH | 91 |
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| SAFETY | ||||||||
| SAFETY | 45 |
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| SENTIMENT | ||||||||
| SENTIMENT | 46 |
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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 2023, overall professional sentiment and financial characteristics for the stock Royal Mail are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Royal Mail. The consolidated Value Rank has an attractive rank of 62, which means that the share price of Royal Mail 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 62% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 91, 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. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 46. Professional investors are more confident in 54% other stocks. Worryingly, the company has risky financing, with a Safety rank of 45. This means 55% of comparable companies have a safer financing structure than Royal Mail. ...read more
RECOMMENDATION: With a consolidated 360° View of 82, Royal Mail is better positioned than 82% of all alternative stock investment opportunities based on the Obermatt Method. Even though half of the consolidated Obermatt Ranks are above-average, namely the Value Rank at 62 and the Growth Rank above-average at 91, the picture is still mixed. The professional investor community is skeptical, with the Sentiment Rank below-average at 46. In addition, the company financing structure is on the riskier side (Safety Rank of 45). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. One may be tempted by above-average growth, but that could also change quickly, as past performance is not a good indicator of future performance. Since the financing structure is on the risky side, investors should 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 Royal Mail only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 46 (better than 46% compared with alternatives), overall professional sentiment and engagement for the stock Royal Mail is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Royal Mail. Analyst Opinions are at a rank of 15 (worse than 85% 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 62, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Royal Mail. Even better, the Professional Investors rank is 50, meaning that professional investors hold more stock in this company than in 50% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 56, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 56% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 46 (less encouraging than 54% compared with investment alternatives), Royal Mail has a reputation among professional investors that is below that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Royal Mail Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 62 (better than 62% compared with alternatives), Royal Mail shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Royal Mail. Price-to-Sales (P/S) is 89, which means that the stock price compared with what market professionals expect for future sales is lower than for 89% of comparable companies, indicating a good value concerning Royal Mail's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio), which is more favorable than for 85% of alternatives (15% of peers have a higher ratio). But expected dividend yields with a Dividend Yield rank of 34 are lower than average (dividends are expected to be lower than 66% of other stocks) while the Price to Profit ratio (or Price to Earnings (P/E) ratio) is higher than average with a Price-to-Profit Rank of 5, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 62, is a buy recommendation based on Royal Mail's stock price compared with the company's operational size and dividend yields. Low profits and low dividends as seen here for Royal Mail may indicate a restructuring phase. This could be transitory, making the company a good value when profits recover and dividends return to higher levels. If the stock price is compared with the size indicators for revenue and invested capital, it is on the lower side, making this stock a good value investment (apart from current profit and dividend expectations). ...read more
Growth Strategy: Royal Mail Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 91 (better than 91% compared with alternatives) for 2023, Royal Mail shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for Royal Mail. Sales Growth has a value of 58, which means that, currently, professionals expect the company to grow more than 58% of its competitors. The same is valid for Profit Growth with a value of 85 and for Capital Growth with 60. In addition, Stock Returns had an above-average rank value of 69, which means they have been higher than 69% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 91, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Royal Mail exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Royal Mail Debt Financing Safety below-average
| SAFETY METRICS | October 5, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 80 |
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| REFINANCING | ||||||||
| REFINANCING | 49 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 6 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 45 |
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ANALYSIS: With an Obermatt Safety Rank of 45 (better than 45% compared with alternatives), the company Royal Mail 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 Royal Mail 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 just one indicator above average for Royal Mail and the other two below average. Leverage is at a rank of 80 meaning the company has a below-average debt-to-equity ratio. It has less debt than 80% of its competitors.Refinancing is at a rank of 49, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 51% of its competitors. Liquidity is at a rank of 6, meaning that the company generates less profit to service its debt than 94% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 45 (worse than 55% compared with alternatives), Royal Mail has a financing structure that is riskier than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of Royal Mail are on the safer side. ...read more
Combined financial peformance: Royal Mail Top Financial Performance
| COMBINED PERFORMANCE | October 5, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 62 |
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| GROWTH | ||||||||
| GROWTH | 91 |
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| SAFETY | ||||||||
| SAFETY | 6 |
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| COMBINED | ||||||||
| COMBINED | 82 |
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ANALYSIS: With an Obermatt Combined Rank of 82 (better than 82% compared with investment alternatives), Royal Mail (Air Freight & Logistics, United Kingdom) shares have much better financial characteristics than comparable stocks. Shares of Royal Mail are a good value (attractively priced) with a consolidated Value Rank of 62 (better than 62% of alternatives), show above-average growth (Growth Rank of 91) but are riskily financed (Safety Rank of 45), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 82, is a strong buy recommendation based on Royal Mail's financial characteristics. As the company Royal Mail's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 62) and above-average growth (Obermatt Growth Rank of 91), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 45) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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