Adairs Limited (ASX:ADH) 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 ADH, it is a financially-healthy company with a great history and an optimistic future outlook. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Adairs here.
Flawless balance sheet with solid track record and pays a dividend
Over the past few years, ADH has demonstrated a proven ability to generate robust returns of 27% Unsurprisingly, ADH surpassed the Specialty Retail industry return of 13%, which gives us more confidence of the company’s capacity to drive earnings going forward.
ADH’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that ADH manages its cash and cost levels well, which is a crucial insight into the health of the company. ADH’s has produced operating cash levels of 1.47x total debt over the past year, which implies that ADH’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
For Adairs, I’ve put together three fundamental aspects you should look at:
- Valuation: What is ADH 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 ADH is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does ADH 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 ADH as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ADH? 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.