LEONI AG (FRA:LEO): Commentary On Fundamentals

Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on LEONI AG (FRA:LEO) due to its excellent fundamentals in more than one area. LEO is a financially-sound company with a a strong history superior dividend payments, trading at a great value. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my high-level commentary, take a look at the report on LEONI here.

Very undervalued with excellent balance sheet and pays a dividend

LEO's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. LEO's has produced operating cash levels of 0.35x total debt over the past year, which implies that LEO's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. LEO'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. Compared to the rest of the auto components industry, LEO is also trading below its peers, relative to earnings generated. This supports the theory that LEO is potentially underpriced.

For those seeking income streams from their portfolio, LEO is a robust dividend payer as well. Over the past decade, the company has consistently increased its dividend payout, reaching a yield of 3.33%.

Next Steps:

For LEONI, I've compiled three important factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for LEO’s future growth? Take a look at our free research report of analyst consensus for LEO’s outlook.
2. Historical Performance: What has LEO'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 LEO? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

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 editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.