A Holistic Look At United Carpets Group plc (LON:UCG)

United Carpets Group plc (LON:UCG) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of UCG, it is a financially-healthy company with a a great track record superior dividend payments, trading at a discount. Below is a brief commentary on these key aspects. If you’re interested in understanding beyond my broad commentary, take a look at the report on United Carpets Group here.

Undervalued with excellent balance sheet and pays a dividend

UCG’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 UCG manages its cash and cost levels well, which is an important determinant of the company’s health. UCG’s has produced operating cash levels of 25.02x total debt over the past year, which implies that UCG’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. UCG’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if UCG’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the specialty retail industry, UCG is also trading below its peers, relative to earnings generated. This supports the theory that UCG is potentially underpriced.

AIM:UCG Intrinsic Value Export January 24th 19
AIM:UCG Intrinsic Value Export January 24th 19

Income investors would also be happy to know that UCG is one of the highest dividend payers in the market, with current dividend yield standing at 8.4%. UCG has also been regularly increasing its dividend payments to shareholders over the past decade.

AIM:UCG Historical Dividend Yield January 24th 19
AIM:UCG Historical Dividend Yield January 24th 19

Next Steps:

For United Carpets Group, I’ve compiled three essential aspects you should look at:

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