Australian Pharmaceutical Industries Limited (ASX:API) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of API, it is a financially-robust company with a an impressive history high-grade dividend payments, trading at a great value. Below is a brief commentary on these key aspects. If you’re interested in understanding beyond my broad commentary, take a look at the report on Australian Pharmaceutical Industries here.
Flawless balance sheet, undervalued and pays a dividend
API’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 implies that API manages its cash and cost levels well, which is a key determinant of the company’s health. API appears to have made good use of debt, producing operating cash levels of 0.58x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated. API’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts’ consensus forecast growth be correct. Compared to the rest of the healthcare industry, API is also trading below its peers, relative to earnings generated. This further reaffirms that API is potentially undervalued.
Income investors would also be happy to know that API is a great dividend company, with a current yield standing at 5.7%. API has also been regularly increasing its dividend payments to shareholders over the past decade.
For Australian Pharmaceutical Industries, I’ve put together three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for API’s future growth? Take a look at our free research report of analyst consensus for API’s outlook.
- Historical Performance: What has API’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.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of API? 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.