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Empired Limited (ASX:EPD) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of EPD, it is a financially-healthy company with a strong track record and an optimistic future outlook. Below, I've touched on some key aspects you should know on a high level. If you're interested in understanding beyond my broad commentary, read the full report on Empired here.
Very undervalued with flawless balance sheet
One reason why investors are attracted to EPD is its earnings growth potential in the near future of 23%, bolstered by its impressive cash-generating ability, as analysts predict its operating cash flows will rise by 71% over the same time period. This is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. In the previous year, EPD has ramped up its bottom line by 59%, with its latest earnings level surpassing its average level over the last five years. Not only did EPD outperformed its past performance, its growth also surpassed the IT industry expansion, which generated a 51% earnings growth. This is an notable feat for the company.
EPD is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. EPD's has produced operating cash levels of 0.5x total debt over the past year, which implies that EPD's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
Next Steps:
For Empired, I've compiled three key factors you should further examine:
- Valuation: What is EPD 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 EPD is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does EPD 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 EPD as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of EPD? 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 editorial-team@simplywallst.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.