November 16, 2023
Top 10 Stock Royal Mail 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 11: Sustainable Cities and Communities


royalmailgroup.com


Royal Mail is listed as a top 10 stock on November 16, 2023 in the market index SDG 11 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 70 (high 70% performer), Obermatt assesses an overall buy recommendation for Royal Mail on November 16, 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
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Top 10 Stocks ≠ most popular stocks

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 Buy

360 METRICS November 16, 2023
VALUE
VALUE
GROWTH
GROWTH
SAFETY
SAFETY
SENTIMENT
SENTIMENT
360° VIEW
360° VIEW

ANALYSIS: With an Obermatt 360° View of 70 (better than 70% compared with alternatives), overall professional sentiment and financial characteristics for the stock Royal Mail are above average. 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 68, 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 68% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 79, 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 42. Professional investors are more confident in 58% 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 70, Royal Mail is better positioned than 70% 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 68 and the Growth Rank above-average at 79, the picture is still mixed. The professional investor community is skeptical, with the Sentiment Rank below-average at 42. 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

SENTIMENT METRICS November 16, 2023
ANALYST OPINION
ANALYST OPINION
OPINIONS CHANGE
OPINIONS CHANGE
PRO HOLDINGS
PRO HOLDINGS
MARKET PULSE
MARKET PULSE
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT

ANALYSIS: With an Obermatt Sentiment Rank of 42 (better than 42% 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 half of the metrics below and half above average for Royal Mail. Analyst Opinions are at a rank of 18 (worse than 82% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 47, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 51, which means that professional investors hold more stock in this company than in 51% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 65, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 65% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Royal Mail and the professional news channels are on the positive side. ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 42 (less encouraging than 58% compared with investment alternatives), Royal Mail has a reputation among professional investors that is below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more



Value Strategy: Royal Mail Stock Price Value better than average

VALUE METRICS November 16, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)
DIVIDEND YIELD
DIVIDEND YIELD
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE

ANALYSIS: With an Obermatt Value Rank of 68 (better than 68% 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 three out of four indicators are above average for Royal Mail. Price-to-Sales (P/S) is 91 which means that the stock price compared with what market professionals expect for future sales is lower than for 91% of comparable companies, indicating a good value for Royal Mail's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 80. Finally, compared with other companies in the same industry, dividend yields of Royal Mail are expected to be higher than for 55% of all competitors (a Dividend Yield rank of 55). The only low rank is for expected profits with a Price-to-Profit Rank of 11, indicating that the market expects the company's profit to be low despite a high dividend. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 68, is a buy recommendation based on Royal Mail's stock price compared with the company's operational size and dividend yields. The low Profit Rank could result from a one-off charge, for instance, for an accident, a legal settlement, or a restructuring project. If the company keeps its dividends high, the low expected profit may be transitory. If that is the case, the three good value ranks for Sales, Capital, and Dividends are reliable indicators for good stock price value, a low stock price. ...read more



Growth Strategy: Royal Mail Growth Momentum high

GROWTH METRICS November 16, 2023
REVENUE GROWTH
REVENUE GROWTH
PROFIT GROWTH
PROFIT GROWTH
CAPITAL GROWTH
CAPITAL GROWTH
STOCK RETURNS
STOCK RETURNS
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH

ANALYSIS: With an Obermatt Growth Rank of 79 (better than 79% 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 but one indicator above average for Royal Mail. Sales Growth has a value of 59 which means that currently professionals expect the company to grow more than 59% of its competitors. Profit Growth with a value of 84 and Capital Growth with a rank of 60 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 41, which means that stock returns have recently been below 59% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 79, is a buy recommendation for growth and momentum investors. Royal Mail has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for Royal Mail, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. ...read more



Safety Strategy: Royal Mail Debt Financing Safety below-average

SAFETY METRICS November 16, 2023
LEVERAGE
LEVERAGE
REFINANCING
REFINANCING
LIQUIDITY
LIQUIDITY
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY

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 45, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 55% 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 November 16, 2023
VALUE
VALUE
GROWTH
GROWTH
SAFETY
SAFETY
COMBINED
COMBINED

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 68 (better than 68% of alternatives), show above-average growth (Growth Rank of 79) 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 68) and above-average growth (Obermatt Growth Rank of 79), 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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