Is Cardinal Energy Ltd. (TSE:CJ) Potentially Underrated?

Attractive stocks have exceptional fundamentals. In the case of Cardinal Energy Ltd. (TSE:CJ), there’s is a company that has been able to sustain great financial health, trading at an attractive share price. 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 Cardinal Energy here.

Undervalued with adequate balance sheet

CJ’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that CJ has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. CJ’s has produced operating cash levels of 0.34x total debt over the past year, which implies that CJ’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. CJ’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if CJ’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, CJ’s share price is trading below the group’s average. This supports the theory that CJ is potentially underpriced.

TSX:CJ Price Estimation Relative to Market, April 23rd 2019
TSX:CJ Price Estimation Relative to Market, April 23rd 2019

Next Steps:

For Cardinal Energy, there are three relevant aspects you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for CJ’s future growth? Take a look at our free research report of analyst consensus for CJ’s outlook.
  2. Historical Performance: What has CJ’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.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CJ? 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.