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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 Patentus S.A. (WSE:PAT), it is a financially-healthy company with a strong history 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, take a look at the report on Patentus here.
Flawless balance sheet and undervalued
In the past couple of years, PAT has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. Not only did PAT outperformed its past performance, its growth also exceeded the Machinery industry expansion, which generated a 84% earnings growth. This is an notable feat for the company. PAT’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that PAT manages its cash and cost levels well, which is a crucial insight into the health of the company. PAT seems to have put its debt to good use, generating operating cash levels of 0.58x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
PAT is currently trading below its true value, which means the market is undervaluing the company’s expected cash flow going forward. 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. Compared to the rest of the machinery industry, PAT is also trading below its peers, relative to earnings generated. This further reaffirms that PAT is potentially undervalued.
For Patentus, I’ve compiled three pertinent factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for PAT’s future growth? Take a look at our free research report of analyst consensus for PAT’s outlook.
- Dividend Income vs Capital Gains: Does PAT 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 PAT as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of PAT? 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.