Straumann Holding AG is a financially healthy and robust stock with a proven track record of outperformance. We all know Straumann Holding, and having this large-cap to cushion your portfolio during a volatile period in the stock market isn’t a bad idea. Today I will give a high-level overview of the stock, and why I believe it’s still attractive.
Straumann Holding AG provides tooth replacement solutions worldwide. Established in 1954, and led by CEO Marco Gadola, the company currently employs 5.47k people and with the stock’s market cap sitting at CHF9.8b, it comes under the mid-cap stocks category. Bear market volatility can have a short-term impact on large, well-established companies, but in the long-run, these businesses are likely to prevail. This is because fundamentally, nothing has changed. A fall in share price is hardly detrimental to its financial health and business operations. So, large-cap stocks are a safe bet to buy more of when the stock market is selling off.
Currently Straumann Holding has CHF202m on its balance sheet, which requires regular interest payments. This requires the business to have enough cash to meet these upcoming interest expenses. Straumann Holding generates enough earnings to cover its interest payments, more specifically, its interest coverage ratio (EBIT/interest) is 49.45x, which is well-above the minimum requirement of 3x. Furthermore, its operating cash flows amply covers its total debt by 122%, above the safe minimum of 20%. Not to mention, it meets the basic liquidity requirement with current assets exceeding liabilities, which further builds on its financial strength in the face of a volatile market.
STMN’s profit growth over the previous five years has been positive, with an average annual rate of 27%, beating the industry growth rate of 8.9%. It has also returned an ROE of 25% recently, above the industry return of 19%. Straumann Holding’s strong performance over time is a demonstration of its ability to grow through cycles, raising my confidence in the company as a long-term investment.
Next Steps:Whether you’re convinced or not, the key takeaway here is that every stock gets hit in a bear market, but not every stock deserves the blow. When prices are dropping like flies, now is the time to do your research and buy at a discount. Straumann Holding tick the boxes in terms of its scale, financial health and proven track record, but there are a few other things I have yet to consider. Below I’ve compiled a list of factors for you to continue your reading before you buy:
- Future Outlook: What are well-informed industry analysts predicting for STMN’s future growth? Take a look at our free research report of analyst consensus for STMN’s outlook.
- Valuation: What is STMN 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 STMN is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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 email@example.com.