I’ve been keeping an eye on Autohome Inc. (NYSE:ATHM) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe ATHM has a lot to offer. Basically, it is a financially-robust company with an impressive track record and an optimistic growth outlook. 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 Autohome here.
Flawless balance sheet with solid track record
ATHM’s cash-generating ability is outstanding, with analysts expecting its operating cash flows to flourish by 58% in the upcoming year. This underlies the notable 24% return on equity over the next few years leading up to 2022. ATHM delivered a bottom-line expansion of 43% in the prior year, with its most recent earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 26%, which is what investors like to see!
ATHM’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 an important determinant of the company’s health. Investors should not worry about ATHM’s debt levels because the company has none! It has only utilized funding from its equity capital to run the business, which is rather impressive for a US$11b market cap company. ATHM 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.
For Autohome, I’ve put together three key aspects you should further examine:
- Valuation: What is ATHM 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 ATHM is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does ATHM 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 ATHM as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ATHM? 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 firstname.lastname@example.org. 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.