Why Fundamental Investors Might Love Shoppers Stop Limited (NSE:SHOPERSTOP)

Shoppers Stop Limited (NSE:SHOPERSTOP) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of SHOPERSTOP, it is a company with strong financial health as well as an optimistic future outlook. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, read the full report on Shoppers Stop here.

Excellent balance sheet with reasonable growth potential

One reason why investors are attracted to SHOPERSTOP is its earnings growth potential in the near future of 33%, made up of high-quality, operational cash from its core business, which is expected to more than double over the next year. This indicates a high-quality bottom-line expansion, as opposed to those driven by unsustainable cost-cutting activities. SHOPERSTOP’s debt-to-equity ratio stands at 8.9%, which means its debt level is reasonable. This indicates a good balance between taking advantage of low cost funding through debt financing, but having enough financial flexibility and headroom to grow debt in the future. SHOPERSTOP appears to have made good use of debt, producing operating cash levels of 2.58x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

Next Steps:

For Shoppers Stop, I've put together three pertinent factors you should look at:

1. Historical Performance: What has SHOPERSTOP's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Valuation: What is SHOPERSTOP worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SHOPERSTOP is currently mispriced by the market.
3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SHOPERSTOP? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.