These Fundamentals Make Leon’s Furniture Limited (TSE:LNF) Truly Worth Looking At

I’ve been keeping an eye on Leon’s Furniture Limited (TSE:LNF) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe LNF has a lot to offer. Basically, it is a financially-robust company with a an impressive history of performance, trading at a discount. Below, I’ve touched on some key aspects you should know on a high level. For those interested in digger a bit deeper into my commentary, take a look at the report on Leon’s Furniture here.

Flawless balance sheet, undervalued and pays a dividend

Over the past year, LNF has grown its earnings by 15%, with its most recent figure exceeding its annual average over the past five years. Not only did LNF outperformed its past performance, its growth also surpassed the Specialty Retail industry expansion, which generated a 1.9% earnings growth. This is an notable feat for the company. LNF 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. LNF appears to have made good use of debt, producing operating cash levels of 0.9x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

TSX:LNF Income Statement, April 18th 2019
TSX:LNF Income Statement, April 18th 2019

LNF’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. 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. Also, relative to the rest of its peers with similar levels of earnings, LNF’s share price is trading below the group’s average. This bolsters the proposition that LNF’s price is currently discounted.

TSX:LNF Intrinsic value, April 18th 2019
TSX:LNF Intrinsic value, April 18th 2019

Next Steps:

For Leon’s Furniture, I’ve put together three fundamental aspects you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for LNF’s future growth? Take a look at our free research report of analyst consensus for LNF’s outlook.
  2. Dividend Income vs Capital Gains: Does LNF 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 LNF as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of LNF? 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.