Is TGS-NOPEC Geophysical Company ASA (OB:TGS) Potentially Underrated?

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Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on TGS-NOPEC Geophysical Company ASA (OB:TGS) due to its excellent fundamentals in more than one area. TGS is a financially-healthy company with an impressive track record and an optimistic growth outlook. Below, I’ve touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on TGS-NOPEC Geophysical here.

High growth potential with excellent balance sheet

TGS is an attractive stock for growth-seeking investors, with an expected earnings growth of 21% in the upcoming year underlying the notable 22% return on equity over the next few years leading up to 2022. TGS delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. Not only did TGS outperformed its past performance, its growth also exceeded the Energy Services industry expansion, which generated a -18% earnings growth. This is an optimistic signal for the future.

OB:TGS Past and Future Earnings, July 2nd 2019
OB:TGS Past and Future Earnings, July 2nd 2019

TGS’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that TGS has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. TGS’s has produced operating cash levels of 198x total debt over the past year, which implies that TGS’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

OB:TGS Historical Debt, July 2nd 2019
OB:TGS Historical Debt, July 2nd 2019

Next Steps:

For TGS-NOPEC Geophysical, I’ve compiled three relevant aspects you should further research:

  1. Valuation: What is TGS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TGS is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does TGS 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 TGS as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of TGS? 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.