Attractive stocks have exceptional fundamentals. In the case of Kelly Partners Group Holdings Limited (ASX:KPG), there’s is a financially-healthy company with a excellent growth outlook, not yet reflected in the share price. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, take a look at the report on Kelly Partners Group Holdings here.
High growth potential with excellent balance sheet
One reason why investors are attracted to KPG is its earnings growth potential in the near future of 34% which is expected to flow into an impressive return on equity of 65% over the next couple of years. KPG’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of KPG’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the commercial services industry, KPG is also trading below its peers, relative to earnings generated. This further reaffirms that KPG is potentially undervalued.
KPG’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that KPG has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. KPG appears to have made good use of debt, producing operating cash levels of 0.54x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
For Kelly Partners Group Holdings, I’ve compiled three essential factors you should further research:
- Historical Performance: What has KPG’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.
- Dividend Income vs Capital Gains: Does KPG return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from KPG as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of KPG? 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 email@example.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.