Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
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 VAALCO Energy, Inc. (NYSE:EGY), it is a financially-robust company with a a great track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on VAALCO Energy here.
Flawless balance sheet with outstanding track record
In the past couple of years, EGY has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. This illustrates a strong track record, leading to a satisfying return on equity of 90%, which is what investors like to see! EGY’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 suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. EGY currently has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is typically normal for a small-cap company. EGY has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
EGY’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. 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. Also, relative to the rest of its peers with similar levels of earnings, EGY’s share price is trading below the group’s average. This supports the theory that EGY is potentially underpriced.
For VAALCO Energy, there are three important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for EGY’s future growth? Take a look at our free research report of analyst consensus for EGY’s outlook.
- Dividend Income vs Capital Gains: Does EGY 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 EGY as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of EGY? 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.