Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on Coherent, Inc. (NASDAQ:COHR) due to its excellent fundamentals in more than one area. COHR is a financially-robust company with a a strong track record of performance, trading at a great value. 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 Coherent here.
Undervalued with excellent balance sheet
COHR has a strong track record of performance. In the previous year, COHR delivered an impressive double-digit return of 12% Unsurprisingly, COHR surpassed the industry return of 6.0%, which gives us more confidence of the company’s capacity to drive earnings going forward. COHR is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. COHR seems to have put its debt to good use, generating operating cash levels of 0.55x 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.
COHR’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if COHR’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the electronic industry, COHR is also trading below its peers, relative to earnings generated. This further reaffirms that COHR is potentially undervalued.
For Coherent, I’ve compiled three relevant aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for COHR’s future growth? Take a look at our free research report of analyst consensus for COHR’s outlook.
- Dividend Income vs Capital Gains: Does COHR 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 COHR as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of COHR? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.