As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Grange Resources Limited (ASX:GRR), it is a financially-healthy company with a a great history of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Grange Resources here.
Outstanding track record and undervalued
In the previous year, GRR has ramped up its bottom line by 87%, with its latest earnings level surpassing its average level over the last five years. This illustrates a strong track record, leading to a satisfying return on equity of 24%. which is an notable feat for the company. GRR is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that GRR manages its cash and cost levels well, which is a crucial insight into the health of the company. GRR’s has produced operating cash levels of 21.63x total debt over the past year, which implies that GRR’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
GRR’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of GRR’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, GRR’s share price is trading below the group’s average. This bolsters the proposition that GRR’s price is currently discounted.
For Grange Resources, I’ve compiled three fundamental factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for GRR’s future growth? Take a look at our free research report of analyst consensus for GRR’s outlook.
- Dividend Income vs Capital Gains: Does GRR 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 GRR as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of GRR? 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.