Arkema SA (EPA:AKE): The Best Of Both Worlds

Arkema SA (EPA:AKE) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of AKE, it is a financially-healthy company with a a great track record of performance, trading at a great value. Below, I’ve touched on some key aspects you should know on a high level. If you’re interested in understanding beyond my high-level commentary, take a look at the report on Arkema here.

Solid track record with excellent balance sheet and pays a dividend

In the previous year, AKE has ramped up its bottom line by 39%, with its latest earnings level surpassing its average level over the last five years. In addition to beating its historical values, AKE also outperformed its industry, which delivered a growth of 9.4%. This paints a buoyant picture for the company. AKE’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 AKE manages its cash and cost levels well, which is a crucial insight into the health of the company. AKE seems to have put its debt to good use, generating operating cash levels of 0.38x 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.

ENXTPA:AKE Income Statement Export November 29th 18
ENXTPA:AKE Income Statement Export November 29th 18

AKE’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of AKE’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the chemicals industry, AKE is also trading below its peers, relative to earnings generated. This further reaffirms that AKE is potentially undervalued.

ENXTPA:AKE Intrinsic Value Export November 29th 18
ENXTPA:AKE Intrinsic Value Export November 29th 18

Next Steps:

For Arkema, I’ve compiled three important factors you should further research:

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