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 Dundee Precious Metals Inc. (TSE:DPM), it is a financially-sound company with an impressive track record and an optimistic growth outlook. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, take a look at the report on Dundee Precious Metals here.
Undervalued with reasonable growth potential
Investors in search for stocks with room to flourish should look no further than DPM, with its expected earinngs growth of 32%, bolstered by its impressive cash-generating ability, as analysts predict its operating cash flows will rise by 59% over the same time period. This is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. DPM delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. In addition to beating its historical values, DPM also outperformed its industry, which delivered a growth of -29%. This is an notable feat for the company.
With a debt-to-equity ratio of 7.3%, DPM’s debt level is reasonable. This implies that DPM has a healthy balance between taking advantage of low cost debt funding as well as sufficient financial flexibility without succumbing to the strict terms of debt. DPM’s has produced operating cash levels of 2.11x total debt over the past year, which implies that DPM’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
For Dundee Precious Metals, there are three essential factors you should further examine:
- Valuation: What is DPM 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 DPM is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does DPM 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 DPM as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of DPM? 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 firstname.lastname@example.org. 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.