Algoma Central Corporation (TSE:ALC) 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 ALC, it is a financially-sound company with an impressive history high-grade dividend payments, trading at a great value. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Algoma Central here.
Undervalued established dividend payer
ALC’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that ALC manages its cash and cost levels well, which is a key determinant of the company’s health. ALC seems to have put its debt to good use, generating operating cash levels of 0.33x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows. ALC is currently trading below its true value, which means the market is undervaluing the company’s expected cash flow going forward. Investors have the opportunity to buy into the stock to reap capital gains, if ALC’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the shipping industry, ALC is also trading below its peers, relative to earnings generated. This further reaffirms that ALC is potentially undervalued.
For those seeking income streams from their portfolio, ALC is a robust dividend payer as well. Over the past decade, the company has consistently increased its dividend payout, reaching a yield of 3.1%.
Next Steps:
For Algoma Central, there are three pertinent factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for ALC’s future growth? Take a look at our free research report of analyst consensus for ALC’s outlook.
- Historical Performance: What has ALC’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 ALC? 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.