RXP Services Limited (ASX:RXP) 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 RXP, it is a financially-robust company with a a great track record high-quality dividend payments, trading at a great value. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on RXP Services here.
Very undervalued with excellent balance sheet and pays a dividend
RXP's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that RXP manages its cash and cost levels well, which is an important determinant of the company’s health. RXP appears to have made good use of debt, producing operating cash levels of 0.7x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated. RXP is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. 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 it industry, RXP is also trading below its peers, relative to earnings generated. This further reaffirms that RXP is potentially undervalued.
RXP is considered one of the top dividend payers in the market, and it has also been able to maintain it at a level in which net income is able to cover dividend payments.
Next Steps:
For RXP Services, there are three essential factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for RXP’s future growth? Take a look at our free research report of analyst consensus for RXP’s outlook.
- Historical Performance: What has RXP'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 RXP? 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.