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 Altium Limited (ASX:ALU), it is a financially-sound company with an impressive track record and an optimistic future outlook. In the following section, I expand a bit more on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on Altium here.
Flawless balance sheet with solid track record
Over the past year, ALU has grown its earnings by 41%, with its most recent figure exceeding its annual average over the past five years. The strong earnings growth is reflected in impressive double-digit 29% return to shareholders, which is an notable feat for the company.
ALU'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 a crucial insight into the health of the company. Investors should not worry about ALU’s debt levels because the company has none! This means it is running its business only on equity capital funding, which is rather impressive for a AU$4.5b market cap company. ALU 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 Altium, I've put together three fundamental factors you should further examine:
- Valuation: What is ALU 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 ALU is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does ALU 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 ALU as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ALU? 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.