Resolute Mining Limited (ASX:RSG): Commentary On Fundamentals

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 Resolute Mining Limited (ASX:RSG), it is a financially-healthy company with a a excellent future outlook, not yet priced into the stock. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my high-level commentary, read the full report on Resolute Mining here.

Flawless balance sheet and undervalued

Investors in search for stocks with room to flourish should look no further than RSG, with its expected earinngs growth of 25%, bolstered by its outstanding cash-generating ability, as analysts predict its operating cash flows will more than double over the same time period. This is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. RSG's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if RSG's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of AU companies with similar levels of earnings, RSG's share price is trading below the group's average. This bolsters the proposition that RSG's price is currently discounted.

RSG'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 suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. RSG appears to have made good use of debt, producing operating cash levels of 0.6x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

Next Steps:

For Resolute Mining, I've compiled three relevant aspects you should further examine:

1. Historical Performance: What has RSG'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. Dividend Income vs Capital Gains: Does RSG 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 RSG as an investment.
3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of RSG? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.