American Equity Investment Life Holding Company (NYSE:AEL) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of AEL, it is a financially-robust company with a strong track record high-quality dividend payments, trading at a discount. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on American Equity Investment Life Holding here.
Very undervalued with adequate balance sheet and pays a dividend
AEL’s debt-to-equity ratio stands at 21%, which means its debt level is acceptable. This means that AEL’s capital structure strikes a good balance between low-cost debt funding and maintaining financial flexibility without overly restrictive terms of debt. AEL appears to have made good use of debt, producing operating cash levels of 2.79x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated. AEL'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 AEL's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the insurance industry, AEL is also trading below its peers, relative to earnings generated. This further reaffirms that AEL is potentially undervalued.
Income investors would also be happy to know that AEL is a great dividend company, with a current yield standing at 1.3%. AEL has also been regularly increasing its dividend payments to shareholders over the past decade.
For American Equity Investment Life Holding, there are three key factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for AEL’s future growth? Take a look at our free research report of analyst consensus for AEL’s outlook.
- Historical Performance: What has AEL's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AEL? 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.