Brief Commentary On Flowtech Fluidpower plc’s (LON:FLO) Fundamentals

Attractive stocks have exceptional fundamentals. In the case of Flowtech Fluidpower plc (LON:FLO), there’s is a company that has been able to sustain great financial health, trading at an attractive share price. Below is a brief commentary on these key aspects. For those interested in digging a bit deeper into my commentary, take a look at the report on Flowtech Fluidpower here.

Excellent balance sheet and good value

FLO’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that FLO has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. FLO’s debt-to-equity ratio stands at 25%, which means its debt level is acceptable. This means that FLO’s capital structure strikes a good balance between low-cost debt funding and maintaining financial flexibility without overly restrictive terms of debt. FLO’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. 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 GB companies with similar levels of earnings, FLO’s share price is trading below the group’s average. This further reaffirms that FLO is potentially undervalued.

AIM:FLO Intrinsic value, August 23rd 2019
AIM:FLO Intrinsic value, August 23rd 2019

Next Steps:

For Flowtech Fluidpower, I’ve put together three essential factors you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for FLO’s future growth? Take a look at our free research report of analyst consensus for FLO’s outlook.
  2. Historical Performance: What has FLO’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 FLO? 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.