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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of 1pm plc (LON:OPM), it is a financially-robust company with a an impressive track record of performance, 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, read the full report on 1pm here.
Undervalued with proven track record
OPM delivered a bottom-line expansion of 58% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did OPM outperformed its past performance, its growth also exceeded the Diversified Financial industry expansion, which generated a -0.9% earnings growth. This is an optimistic signal for the future. OPM's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that OPM manages its cash and cost levels well, which is a key determinant of the company’s health. OPM appears to have made good use of debt, producing operating cash levels of 0.44x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
OPM'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 OPM's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, OPM's share price is trading below the group's average. This further reaffirms that OPM is potentially undervalued.
Next Steps:
For 1pm, I've put together three pertinent factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for OPM’s future growth? Take a look at our free research report of analyst consensus for OPM’s outlook.
- Dividend Income vs Capital Gains: Does OPM 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 OPM as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of OPM? 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.