Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on Hong Fok Corporation Limited (SGX:H30) due to its excellent fundamentals in more than one area. H30 is a financially-sound company with a a strong history of performance, trading at a great value. 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 Hong Fok here.
Undervalued with proven track record
Over the past year, H30 has grown its earnings by 6.1%, with its most recent figure exceeding its annual average over the past five years. Not only did H30 outperformed its past performance, its growth also exceeded the Real Estate industry expansion, which generated a 5.7% earnings growth. This is what investors like to see! H30’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 an important determinant of the company’s health. With a debt-to-equity ratio of 31%, H30’s debt level is acceptable. This implies that H30 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.
H30’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 H30’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, H30’s share price is trading below the group’s average. This bolsters the proposition that H30’s price is currently discounted.
For Hong Fok, there are three key aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for H30’s future growth? Take a look at our free research report of analyst consensus for H30’s outlook.
- Dividend Income vs Capital Gains: Does H30 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 H30 as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of H30? 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.