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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 China Traditional Chinese Medicine Holdings Co. Limited (HKG:570), it is a financially-healthy company with a great track record high-grade dividend payments, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, read the full report on China Traditional Chinese Medicine Holdings here.
Very undervalued with excellent balance sheet and pays a dividend
570’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. With a debt-to-equity ratio of 35%, 570’s debt level is reasonable. This implies that 570 has a healthy balance between taking advantage of low cost debt funding as well as sufficient financial flexibility without succumbing to the strict terms of debt. 570 is currently trading below its true value, which means the market is undervaluing the company’s expected cash flow going forward. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of 570’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the pharmaceuticals industry, 570 is also trading below its peers, relative to earnings generated. This supports the theory that 570 is potentially underpriced.
570 is also a dividend company, with ample net income to cover its dividend payout, which has been consistently growing over the past decade, keeping income investors happy.
For China Traditional Chinese Medicine Holdings, there are three key aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for 570’s future growth? Take a look at our free research report of analyst consensus for 570’s outlook.
- Historical Performance: What has 570’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.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 570? 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 email@example.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.